US stocks fall as weak GDP growth spreads rate-cut gloom

Disappointing results from Meta, whose shares plunged nearly 11%, also weighed on market sentiment. Three other Magnificent Seven stocks, including , Amazon.com and , finished lower.

However, shares of Alphabet and Microsoft were advancing in extended hours trading after both companies reported quarterly results that beat Wall Street estimates. Intel forecast second-quarter revenue and profit below market estimates, sending its shares down 8% in extended hours trading.

Equities in the communications sector, dragged down by Meta, were the biggest losers in S&P 500. Other categories of stocks that lost ground are in healthcare, real estate, financials, consumer staples, and consumer discretionary sectors. "The GDP numbers definitely puts a ding in the paradigm that markets were hanging onto for equities in terms of high growth; and if you don't have high growth that will translate to lower-than-expected earnings," said James St. Aubin, chief investment officer at Sierra Mutual Funds in California.

The Dow Jones Industrial Average fell 375.12 points, or 0.98%, to 38,085.80, the S&P 500 lost 23.21 points, or 0.46%, to 5,048.42 and the Nasdaq Composite lost 100.99 points, or 0.64%, to 15,611.76.

Money markets are pricing in just about 36 basis points of rate cuts from the Fed this year, down from about 150 bps seen at the start of the year, according to LSEG data.

Separately, the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, pointing to still tight labor market conditions. The March Personal Consumption expenditures (PCE) index, the Fed's preferred inflation gauge, is due on Friday.

"The double whammy was also the inflation number that came in stronger than expected so there wasn't really a silver lining in that report; it's still positive in absolute terms but relative to high expectations it was disappointing," St. Aubin added.

International Business Machines fell 8% after it announced a $6.4 billion deal to buy HashiCorp alongside its first-quarter results, in which revenue missed estimates.

Southwest Airlines slid nearly 7% as the carrier slashed its projections for new aircraft deliveries from Boeing in 2024 for the third time.

Caterpillar shed 7% after it cut second quarter sales forecasts as demand for its construction equipment eases from last year's boom.

Rising gold prices helped Newmont, the world's largest bullion miner, to report first quarter profit that beat estimates. Its shares gained 12%.

Declining issues outnumbered advancers by a 2.3-to-1 ratio on the NYSE. There were 72 new highs and 85 new lows on the NYSE. On the Nasdaq, 1,410 stocks rose and 2,819 fell as declining issues outnumbered advancers by a 2-to-1 ratio.

The S&P 500 posted 14 new 52-week highs and seven new lows while the Nasdaq recorded 37 new highs and 203 new lows.

Volume on U.S. exchanges was 10.7 billion shares, compared with the 11.07 billion average for the last 20 days.