Market Uncertainty Weighs on S&P 500 and Nasdaq Amid Economic Concerns

The S&P 500 and Nasdaq saw significant declines, reversing early gains due to growing concerns over the economy's slowdown. Despite initial optimism from Meta Platforms' strong earnings, data indicating a drop in manufacturing activity spurred fears about the Federal Reserve's monetary policy. Market analysts express caution as investors react to economic signals.

The S&P 500 fell more than 2% and the Nasdaq more than 3% late on Thursday, reversing early gains after data spurred concerns that the economy may be slowing too fast while the Federal Reserve maintains a restrictive monetary policy.

Initially, equities were buoyed by gains in Meta Platforms after its quarterly results topped expectations and the Facebook parent issued an upbeat outlook for the third quarter, with shares up 4.37% at $495.55. However, concerns over AI-related earnings and the outlook for megacap stocks dampened market sentiment. Stocks turned lower after data from the Institute for Supply Management (ISM) showed an eight-month low in manufacturing activity for July, signifying contraction.

The S&P 500 was down 1.36% in late trade at 5,446.90, and the Nasdaq Composite lost 2.24% to 17,204.798. The Dow Jones Industrial Average also dropped 1.32% to 40,305.14. Market strategists provided varying insights into the situation, highlighting fears over rate cuts and the fundamental state of the economy.

(With inputs from agencies.)