Dow closes down over 200 points after record drop in US GDP

Wall Street’s major averages closed mostly lower after data showed the US economy contracted massively in the second quarter.

On Thursday, the Dow Jones Industrial Average decreased 225.92 points, or 0.85 per cent, to end at 26,313.65, after dropping more than 500 points earlier in the session. The S&P 500 fell 12.22 points, or 0.38 per cent, to 3,246.22. The Nasdaq Composite Index increased 44.87 points, or 0.43 per cent, to 10,587.81, Xinhua news agency reported.

Seven of the 11 primary S&P 500 sectors finished lower, with energy down 4.1 per cent, leading the laggards. Technology rose 0.53 per cent, the best-performing group.

Shares of Facebook, Apple, Amazon and Google-parent Alphabet all closed higher, ahead of their earnings report. The four US tech giants reported quarterly results after Thursday’s close.

Meanwhile, US-listed Chinese companies traded mostly lower, with six of the top 10 stocks by weight in the S&P US Listed China 50 index ending the day on a downbeat note.

The United States has suffered its worst economic decline on record as the nation’s gross domestic product (GDP) plunged by 32.9 per cent in the second quarter amid mounting COVID-19 fallout, the US Commerce Department reported Thursday.

“‘As expected’ is the best that can be said about second quarter GDP. It was abysmal, but at least it was not a surprise,” Chris Low, chief economist at FHN Financial, said in a note.

Looking ahead, Low said “weakness is likely to linger in business investment and state and local government spending, where cuts are already in the works.”

Moreover, US initial jobless claims, a rough way to gauge layoffs, came in at 1.434 million in the week ending July 25, an increase of 12,000 from the prior week’s revised level, the Department of Labor said on Thursday. The previous week’s level was revised up to 1.422 million.