US stock markets plunged amid concerns of stagflation in the American economy.
Wall Street shares tumbled following the release of official figures indicating that US GDP growth was less than expected in the first quarter of the year.
The economy expanded by only 1.6%, missing the forecasted 2.5% growth, alongside reports that inflation was rising faster than anticipated.
Consequently, traders adjusted their expectations for the first rate cut by the US Federal Reserve, now anticipated in December rather than November.
Ian Lyngen from BMO Capital Markets commented that discussions of stagflation are likely to intensify following these reports.
Expectations for a lower opening in US stock markets were already set after Meta announced an increase in spending on artificial intelligence technology, causing unease among investors.
The Dow Jones Industrial Average dropped 1.3% to 37,977.20, and the S&P 500 fell 1.4% to 5,000.05 at the opening bell.
The Nasdaq Composite, heavily influenced by technology stocks, suffered the most, declining 2.2% to 15,360.15, with Meta’s market value seeing a reduction of over $190 billion (£152 billion).
Meanwhile, the FTSE 100 was largely unaffected by the tech sell-off, thanks to its strong leanings towards the financial and commodities sectors, and it managed a slight increase of 0.1% despite the troubling US economic data.
