NEW YORK/ LONDON, May 30 (Reuters) – MSCI’s global equities gauge fell on Thursday and bond yields dropped with the U.S. dollar as investors analysed weaker than expected U.S. growth data and Federal Reserve comments for clues on the outlook for interest rates and the economy.
The U.S. economy grew more slowly than expected in the first quarter after downward revisions to consumer spending, according to a Commerce Department report which showed gross domestic product growing at an annualized rate of 1.3% versus advance estimates of 1.6%.
The initial reaction was that the Fed is more likely to cut rates now than before because a cooling in the economy and consumption might mean slightly less inflation, said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. But he sees the outlook for rates as only one factor.
Earlier, Jamie Cox, managing partner for Harris Financial Group, said the move down in yields reflects the reality that the economy is slowing implied by the GDP data.
On Wall Street, at 2:41 p.m. the Dow Jones Industrial Average fell 333.60 points, or 0.87%, to 38,108.60, the S&P 500 lost 19.05 points, or 0.36%, to 5,247.90 and the Nasdaq Composite lost 102.92 points, or 0.61%, to 16,817.66.
MSCI’s gauge of stocks across the globe fell 1.86 points, or 0.24%, to 782.30.
In energy, oil prices dropped for a second day in a row after the U.S. government reported weak fuel demand and a surprise jump in gasoline and distillate fuel stockpiles.
U.S. crude settled down 1.67% at $77.91 a barrel and Brent futures settled down 2.08% at $81.86 per barrel.
Spot gold added 0.17% to $2,342.70 an ounce as the dollar and bond yields retreated.
(Reporting by Sinéad Carew, Samuel Indyk and Rae Wee; Editing by Nick Macfie, Mark Potter and Alison Williams)
