Dow drops 400 points amid record GDP decline, tech shares fall before big earnings

Finance

A cyclist passes by the New York Stock Exchange in New York, on May 26, 2020.

Wang Ying | Xinhua News Agency | Getty Images

U.S. stock futures were flat on Wednesday night following a session in which the major averages posted solid gains as the Federal Reserve pledged to maintain current stimulative measures.

Dow Jones Industrial Average futures dipped 10 points, or 0.04%. S&P 500 and Nasdaq 100 futures also traded around breakeven.

The Fed kept the overnight U.S. rate in a range between 0% and 0.25%. The central bank noted that while the economy has recovered slightly, activity and employment remain “well below their levels at the beginning of the year.” Fed Chairman Jerome Powell added the central bank will keep an accommodative stance until the economy has “weathered” the effects of the coronavirus pandemic.

“Powell made it loud and clear that our economic recovery is dependent on how we progress in fighting the pandemic,” said Mike Loewengart, managing director of investment strategy at E-Trade. “Although investors may not be deterred by the surge in virus cases, the stock market is less of a focus for the Fed than the economy—and while the two are related, they are far from the same.”

Both the S&P 500 and Nasdaq Composite closed more than 1% higher on Thursday. The Dow climbed 160.29 points, or 0.6%.

The major averages were also boosted by gains from big tech stocks such as Facebook, Amazon Alphabet and Apple. All four stocks ended the day up more than 1% even as their respective CEOs testified in front of Congress, addressing antitrust concerns.

The four companies are slated to report earnings Thursday after the bell. Those reports come after each stock has posted massive year-to-date gains. Facebook and Alphabet are both up more than 13% in 2020. Amazon has surged 64.2% in that time and Apple is up 29.5% this year. It will also be the busiest day of the current earnings season.

“Another round of bullish tech surprises could be enough to jump-start the next leg higher in the post-crash rally,” said Ken Berman of Gorilla Trades.

In economic news, the first reading on second-quarter gross domestic product is set for release at 8:30 a.m. ET along with the latest weekly jobless claims numbers.

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