Finance

Miami is undergoing a population and development boom.
Meanwhile, city officials, scientists and other experts say it’s among the most vulnerable cities worldwide to the impacts of climate change.
That oversized climate risk carries financial implications for residents.
Miami-Dade County officials are working to adapt and make the city livable into the future.

South Pointe Beach in Miami Beach, Florida.
Greg Iacurci

MIAMI — Daniel Habibian worries about climate change. 
His clothing boutique in Miami Beach’s iconic South Beach neighborhood sits just a few blocks inland from the Atlantic Ocean. 

Rising seas threaten to swallow much of the Miami metro area in the coming decades as the world continues to warm and faraway ice sheets melt. By 2060, about 60% of Miami-Dade County will be submerged, estimates Harold Wanless, a professor of geography and sustainable development at the University of Miami.
Yet people keep moving there. The city’s skyline has grown in tandem. 
Miami’s boom runs headlong into a harsh yet inescapable truth: It’s “ground zero for climate change,” said Sonia Brubaker, chief resilience officer for the City of Miami.
Climate risk is “always on our thoughts,” said Habibian, 39, who moved to Miami-Dade County about six years ago.

Daniel Habibian stands outside his store, Studio 26, a clothing boutique in South Beach.
Greg Iacurci

“[Miami] is almost at sea level, so a bit of water can take it underwater,” he told CNBC inside his store, Studio 26.

Outside, sun-kissed tourists and locals trickled by on their way back from the nearby ocean as reggaeton pulsed from flashy convertibles. The March air, a perfect 75 degrees, mixed with a gentle breeze that caressed palm fronds and passersby in a warm embrace. 
Such weather is what drew Habibian to the area from New York.
“We like living here,” he said. “So we’ll see what happens.”

More people ‘moving into risky areas’ than leaving

The Miami metro area — including Miami, Fort Lauderdale and West Palm Beach — is a low-lying swath of South Florida that is home to more than 6 million people. 
Its urban sprawl juts abruptly from the Atlantic shoreline like a vertical spike of glass, metal and concrete.
Construction volume in the greater Miami metro area hit $27.4 billion in 2023, up 73% from $15.8 billion in 2014, according to an analysis by Cumming Group, a project management and cost consulting firm.
It projects that those values, which are adjusted for inflation, will rise to about $29 billion in 2024 and 2025.
The Miami area population has also ballooned, growing by more than 660,000 people from 2010 to 2020 — the most of any other Florida metropolis and nearly twice the tally of No. 2 Tampa-St. Petersburg, according to the Florida Department of Transportation.

The Bentley Residence condominium complex, center, under construction in Miami, Florida, in September 2022.
Saul Martinez/Bloomberg via Getty Images

The trend shows how many Americans are ultimately willing to overlook environmental risks, even though most acknowledge its presence — a choice that could later devastate them financially. 
Across the U.S., people are still moving into areas increasingly prone to natural disasters, according to Andrew Rumbach, a senior fellow at the Urban Institute.
“We have a lot more people moving into risky areas than moving out, which is kind of counterintuitive,” Rumbach said.
The contradictory forces at play in Miami foreshadow the financial hardship many other Americans will likely face, too.

Rising seas and a sinking city

A flooded street in Miami after a tropical storm in June 2022. The system dumped at least six to 10 inches of rain in the area.
Joe Raedle | Getty Images News | Getty Images

Miami’s average elevation is six feet — the same amount of sea-level rise expected in Southeast Florida by the end of the century. The ocean has already risen by about six inches since 2000.
The city is simultaneously sinking. It sits on porous limestone rock, which some engineers have likened to Swiss cheese; in other words, water can easily seep from underground.
These dynamics exacerbate flooding from rising seas, storm surge, torrential rains and so-called “king tides,” which are periodic exceptionally high tides. The frequency of flooding from high tides — known as “sunny day” flooding — is up over 400% in Miami Beach since 2006.
Researchers at the Organisation for Economic Co-operation and Development listed Miami as one of the 10 most vulnerable cities worldwide relative to the number of people at risk of coastal inundation. It’s the most vulnerable when judged by the total value of assets such as buildings and infrastructure at risk.   
Meanwhile, Miami residents are also confronted by more extreme heat and intensifying storms such as hurricanes, experts said. 

Volunteers clear debris from a Florida Keys home damaged by a six-foot storm surge during Hurricane Irma.
Al Diaz/Miami Herald/Tribune News Service via Getty Images

The financial threats of such climate disasters are numerous: property damage, higher insurance premiums and medical bills, lost earnings, falling real estate values, declining tourism, forgone business profits and displacement costs such as temporary housing or relocation, among others.
Despite that risk, 66% of Miami-Dade County residents said they’d never leave, according to a study published in the journal Climate Risk Management.
It is not that they deny climate change: More than three-quarters, 77%, of Miami-Dade County residents say global warming is happening, 5 percentage points above the 72% national average, according to a poll by Yale University’s School of the Environment.
More from Personal Finance:Why climate change may cost you big bucksWhat the SEC vote on climate disclosures means for investors8 easy — and cheap — ways to cut your carbon emissions
“I do believe we’re going to be in danger of losing land in the near future — maybe 50 years, 100 years — because of sea-level rise,” said Steven Bustamante, 32, a Miami Beach resident.
But it’s not something that would push him to leave. 
Bustamante, who works at a market in South Beach, has lived here all his life and loves the subtropical climate.
In multiple street interviews CNBC conducted with Miami residents, weather was almost universally cited as the top draw.
“I wouldn’t leave,” Bustamante said. “I wouldn’t leave for anything.”

CEO says Miami is the ‘future of America’

Jeff Greenberg | Universal Images Group | Getty Images

The “breakneck pace” at which high-rise condos, hotels and offices have popped up has quickly made Miami’s skyline “one of the largest and tallest in the country,” according to Cumming Group.
Miami still has the feel of a city under construction as developers scramble to meet housing demand. Cranes pepper the horizon next to the hollow husks of future high rises.
The City of Miami issued roughly 10 permits to build new residential and mixed-use buildings in 2014, according to a CNBC analysis of city data. By 2019, that figure had ballooned to more than 150 — an increase of well over 1,000%.
“There’s been a fairly strong development boom for quite some time,” said David Arditi, a founding partner of Aria Development Group, a residential real estate developer.
The Covid-19 pandemic “turbocharged” the city’s growth, said Arditi, who leads Aria’s Miami office.
The number of people who moved to the Miami metro area increased by nearly 60% between 2019 and 2022, more than any other major U.S. metro hub, according to the National Association of Realtors.

Office workers in the financial district of downtown Miami, Florida.
Saul Martinez/Bloomberg via Getty Images

With the freedom to work from anywhere, many people sought out better quality of life, including warm weather, relatively low taxes and ample job opportunity, Arditi said from Aria’s sales office for 2200 Brickell, a new residential building slated for completion around early 2026. Half of its 105 available condos are already sold. Prices start at $1 million.
A large share of recent migration is from California, New York and New Jersey, relatively high-tax states, according to a Miami Realtors analysis.
“Climate is only one thing people are thinking about when they’re making these decisions,” said Rumbach, of the Urban Institute.
In hot spots such as Miami, shorter-term interests can trump climate risk, he said.

Billionaires such as Amazon founder Jeff Bezos and Goldman Sachs Managing Director Douglas Sacks have relocated to Miami in recent years. Companies such as Citadel, a financial firm, and SH Hotels & Resorts also recently moved their global headquarters to the city, known as a “gateway” to Latin America and the Caribbean.
Ken Griffin, Citadel’s billionaire CEO, told Bloomberg News in November that Miami “represents the future of America.”
Such company and worker relocations have helped boost the local economy, said Brubaker, the city official.
Miami-Dade County’s 1.6% unemployment rate in February 2024 is near its lowest on record and is substantially lower than the national average of 3.9% that month. 
“And you know, people get to enjoy year-round, beautiful weather,” Brubaker added. “Unless there’s a disaster.”

‘I hope the city doesn’t disappear’

Contractors work at a Miami office tower under construction in September 2022. 
Saul Martinez/Bloomberg via Getty Images

Downtown Miami will soon host the tallest residential building south of New York City — the Waldorf Astoria Hotel and Residences, a 100-story monolith under construction on the shore of Biscayne Bay. Miami Worldcenter, a forthcoming 27-acre mixed-use complex, will be the second-largest urban development in the U.S. behind New York City’s Hudson Yards.
Developers and city officials tell CNBC they think a booming city can continue to thrive alongside climate change.
They tout Miami’s stringent building codes and infrastructure enhancements — such as higher elevation and more permeable ground for new construction, and higher roads and sea walls — as evidence of its resilience.
The City of Miami has a $400 million bond dedicated to investing in climate resilience projects.
“The city actively plans for it,” said Brubaker, who became the City of Miami’s chief resilience officer in 2022. “There’s a lot of preparation going into this.”

South Pointe Park in the City of Miami Beach is a green buffer between the water and the South of Fifth neighborhood.
Greg Iacurci

But some scientists and other experts see a misalignment when it comes to developers’ interests: Are they capitalizing on today’s hot real estate market with short-term investments and planning to offload properties before climate change threatens their long-term value? In that case, condo owners and other buyers may be left holding the bag.
From start to finish, Aria typically exits its real-estate projects after about five years, for example, said Arditi. It depends on the building — condominium projects may be on the short end of that range, while multifamily rentals are generally longer-term, he said.
“We try to be smart about it, try to be proactive as best we can,” Arditi said of climate risk. “It’s clearly top of mind.”
“But I hope the city doesn’t disappear anytime soon,” he added.

Rain storms can induce ‘trauma’  

A woman walks in flooded water during a heavy rainfall in Miami on May 26, 2020.
Chandan Khanna | Afp | Getty Images

The risks of climate change are already a part of life in Miami.
“Every time it rains, I basically suffer a bit of a trauma,” said Dion Williams, a clothing designer with a storefront on Collins Avenue in South Beach, close to Habibian’s shop.
Williams moved to Miami eight years ago. His business, Dion Atelier, is on the ground floor a few streets from the ocean. 
During big rain storms “the swell comes up, and the first thing that happens is the whole entire floor terrace floods,” said the proprietor, standing amid neatly styled displays and mannequins draped in high-end fashion. 
Sometimes, the flooding is so bad it’s “almost like a lake,” Williams said. 
He pointed out sections of the baseboard that had to be ripped out and replaced. Just an inch of flood water can cause $25,000 of property damage, according to the Federal Emergency Management Agency.
Now, as a precaution, Williams covers his merchandise in plastic when it rains. 

About 70% of the 597 Miami-Dade County residents polled for a study published in the Climate Risk Management journal experienced rainfall-related flooding between 2017 and 2022, about 60% were affected by floodwater from hurricanes and tropical storms, and 16% were affected by tidal flooding. 
The financial impacts were broad. Among them, 34% couldn’t commute to work, a dynamic that can reduce household earnings, experts said. 
About 22% said their property and car insurance rates increased. Average property-casualty insurance premiums in the Sunshine State have risen to more than $4,200 a year, triple the national average, according to the Insurance Information Institute.

When underground water can be lethal

Water can also pose more insidious risks than flooding. 
Saltwater intrusion is one dangerous example, said Todd Crowl, director of the Florida International University Institute of Environment and a science advisor for the mayor of Miami-Dade County.
This happens when salt water moves inland into freshwater reserves. That threatens drinking water and coastal infrastructure, since salt water can eat away certain building materials, Crowl said.

“And you know, people get to enjoy year-round, beautiful weather — unless there’s a disaster.”

Sonia Brubaker
chief resilience officer for the City of Miami

Saltwater intrusion is being exacerbated by Miami’s growth.
Inhabitants are drawing increasing amounts of water from freshwater aquifers. The Everglades, which replenishes local aquifers, has lost more than 70% of its water flow over the years, for example. Meanwhile, rising seas push salt water further inland.
It’s a “3,000-pound gorilla in the room,” Crowl said.
Saltwater intrusion was “almost certainly” a contributing factor in the 2021 collapse of a condo building in nearby Surfside, Florida, that killed 98 people, he said. An investigation into the cause of the collapse is ongoing. 
“We’re losing a [water] pressure battle,” Crowl said. “We can’t build these big buildings on the coast if they’ll start getting inundated with salt water under their footings.”

The rich can absorb financial loss …

Florida is also the hurricane capital of the country.
Hurricanes can bring about a kind of “urban renewal,” meteorologist Erik Salna said from the control room for the Wall of Wind, a facility that simulates the turbulent conditions of a Category 5 hurricane. 
As older, outdated dwellings get damaged, destroyed or blown away, new and more expensive buildings remain, he explained.
Twelve massive intake fans are stacked in an open-air hangar adjacent to the Wall of Wind control room. Each is roughly six feet in diameter and weighs 15,000 pounds, about the weight of a mature African elephant. Together, they help generate top wind speeds of 157 miles per hour.

Erik Salna at the Wall of Wind facility, which simulates conditions of a Category 5 hurricane.
Greg Iacurci

A bigger wind facility in development will create maximum speeds of 200 miles an hour. The so-called “Category 6” project is a recognition of a future with more-intense storms.
The financial burden of hurricanes falls hardest on lower-income households, according to researchers at the University of Pennsylvania. 
“If you’re a high-wealth individual, it doesn’t matter,” said Salna, the associate director for education and outreach at the International Hurricane Research Center.
“They’re millionaires,” he said. “They can handle that loss.”

… but they’re increasing their exposure to risk

Mansions along Biscayne Bay. As the area has been developed, the number of mangroves has significantly declined.
Greg Iacurci

Indeed, the ultrarich have flocked to South Florida, driving a mansion boom. 
Many wealthy homeowners have increased their climate risk by cutting mangroves on their property — often to create oceanfront views and make room for boat slips, said Chris Baraloto, who heads the Institute of Environment’s land and biodiversity unit.
Mangroves are dense, coastal shrubs and trees that grow in the tropics and subtropics. They’re ecological wonders, forming a natural, frontline defense against flooding and storm surge, and helping dissipate wave and wind energy.
Baraloto estimates just 2% of mangroves are left in the peninsular City of Miami. 

Todd Crowl and Rita Teutonico of Florida International University look toward Biscayne Bay. At left is one of the City of Miami’s few remaining stands of mangroves.
Greg Iacurci

“This is the view everyone wants,” he said from behind the wheel of a golf cart, as we rolled toward a thin shoreline outcropping of Bermuda grass in The Kampong, a botanical garden in Coconut Grove. A palm tree stood at its point and a sweeping vista of Biscayne Bay lay beyond.
Juxtaposed at left was one of the last remaining patches of mangroves in the urban Miami area, a living memorial to a once-thriving population. 
Mansions flanked it on each side.

Trying to make Miami livable

Meanwhile, Miami Beach recently planted 680 mangroves in Brittany Bay Park, an effort to create a “living shoreline,” said Amy Knowles, the municipality’s chief resilience officer. 
Knowles, also the director of environment and sustainability, was strolling the boardwalk of South Pointe Park, a 19-acre green buffer built between the water and the South of Fifth neighborhood. 
“We’re aware of the science; we’re aware of the risks,” Knowles said.
But it’s not as if officials can just move Southeast Florida, she added.
“It’s very hard for residents, businesses, people to just kind of forget the beauty and the history and acknowledge the risk and maybe just leave,” Knowles said.

Amy Knowles, chief resilience officer and director of environment and sustainability for the City of Miami Beach
Greg Iacurci

Miami-Dade County’s resilience plan — Resilient305, a reference to its area code — aims to help the area both “survive” and “thrive” despite climate risk. 
Knowles and Brubaker of the City of Miami cited a litany of projects planned or underway: Public infrastructure improvements such as elevated roads, upgraded storm-water and sewer systems and higher seawalls; and urban redesign with more green space and tree canopy cover, for example. Salinity control structures have been installed near major canals to separate fresh and saltwater, to prevent saltwater intrusion. 
Miami Beach introduced a grant program that offers up to $20,000 per household to incentivize homeowners to reduce their flood risk, Knowles said.

Brittany Bay Park, City of Miami Beach.
City of Miami Beach

Officials’ efforts appear to have borne some fruit. For example, the Sunset Harbour neighborhood has experienced about 175 fewer sunny-day flood events after a 2017 project that raised streets two or more feet and added stronger storm-water pumps, Knowles said.
While such resilience efforts are helpful, Crowl, the Institute of Environment director, worries about the area’s livability a few decades from now.
“This gets worse and worse and worse and worse,” he said. “That’s the rub. I think it’s kind of getting close to being too late.”
In this new series, CNBC will examine what climate change means for your money, from retirement savings to insurance costs to career outlook.
Has climate change left you with bigger or new bills? Tell us about your experience by emailing me at gregory.iacurci@nbcuni.com. More

The Wall Street Journal reported that the plan is highly secretive and part of a 10-page document that suggests Trump — if elected — would be consulted on interest rate decisions.
Along with those proposals, the draft contends that Trump could remove current Fed Chair Jerome Powell from office and require that Fed policy be aligned with the administration’s goals.

Former US President Donald Trump speaks to members of the media at Manhattan criminal court in New York, US, on Thursday, April 25, 2024. 
Jeenah Moon | Via Reuters

Former President Donald Trump’s political operatives are putting together a plan that would give him unprecedented influence over the Federal Reserve, including a provision that could make him an “acting” central bank board member, according to a report from The Wall Street Journal.
That plan, which the Journal report described as highly secretive, is part of a 10-page document that suggests Trump — if elected — would be consulted on interest rate decisions. In addition, the Treasury Department would be used as an added check and balance to oversee the Fed’s bond-buying activities.

Along with those proposals, the draft contends that Trump could remove current Fed Chair Jerome Powell from office and require that Fed policy be aligned with the administration’s goals. While in office, Trump harshly criticized Powell and his fellow central bankers as they were raising interest rates and reportedly considered ousting him.
Trump campaign officials told the Journal that the draft proposals shouldn’t be considered “official.”
It’s unclear what authority the president would have to take such bold steps on a Fed that traditionally has sought to insulate its activities from outside political pressure.
A Fed spokesperson declined to comment on the report.

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Chinese electric car start-ups Nio and Xpeng are turning to a lower-priced segment of the market with plans to release newly-branded cars this year.
Nio’s first such mass market car will be an SUV cheaper than Tesla’s Model Y, CEO William Li told CNBC’s Eunice Yoon on Thursday.
Xpeng, which sells its cars in a slightly lower price range than Nio, plans to launch its new sub-brand Mona in the next two or three months, Vice Chairman and Co-President Brian Gu told CNBC on Thursday.

Nio Founder and CEO William Li poses outside of the New York Stock Exchange to celebrate his company’s IPO.
Photo: NYSE

BEIJING — Chinese electric car start-ups Nio and Xpeng are turning to a lower-priced segment of the market with plans to release newly branded cars this year.
Nio’s first such mass market car will be an SUV cheaper than Tesla’s Model Y, CEO William Li told CNBC’s Eunice Yoon on Thursday. The Tesla SUV starts at 249,900 yuan ($35,197) in China.

Like many early entrants to China’s electric car market, U.S.-listed Nio targeted the premium market when it launched about a decade ago. Its vehicles can cost around $50,000 or more, offering buyers additional services such as Nio clubhouses and a network of battery charging and swapping stations.
Nio and Xpeng’s plans to launch mass market brands put the companies in more direct competition with local rival BYD and German carmaker Volkswagen.
The new cars come amid an intense price war in China’s new energy car market, which includes battery-only and hybrid-powered vehicles. Such cars now account for well over 40% of new passenger cars sold in the country.
Li said he doesn’t expect the main brand to significantly adjust prices, although he expects price volatility in the market to persist for a while.
Nio is planning a mid-May launch for its new brand, called Onvo or “Le Dao” in Chinese, a name the company says is meant to reflect families — the target consumer segment — having a happy time together.

Xpeng, which sells its cars in a slightly lower price range than Nio, plans to launch its new sub-brand Mona in the next two or three months, Vice Chairman and Co-President Brian Gu told CNBC on Thursday.
Gu said the new cars would sell for less than 150,000 yuan ($20,700), which is lower than the price range Nio is targeting. Last summer, Xpeng said it would develop a new mass market brand for that price range through a strategic partnership with ride-hailing app operator Didi.
“The reason we are ready to tackle that segment is we believe that with scale, with technology and with cost control, we are able to bring the differentiate[d] technology to the mass market,” Gu said, noting that in the past, only the premium market could enjoy higher-end tech.
Xpeng has made its driver-assist software one of its selling points in China. Tesla’s comparable full self drive software isn’t yet available in the country.
Gu said in a briefing with reporters that Xpeng would differentiate the tech that’s available for the mass market brand, versus the existing one.
He also pointed out that there are at least a dozen brands competing in the premium segment, while only two or three brands currently account for about 80% of the mass market in China.
Tesla’s Model Y is the best-selling purely battery-powered electric SUV in China priced below 250,000 yuan, according to Autohome data for the first quarter of the year.
Despite undercutting the Model Y, Li said the new brand’s first car will cost around $30,000 (213,000 yuan) — not as low as BYD.
Chinese battery and electric car giant BYD has found most of its success in the lower end of the mass market. In the last year, it has launched premium and luxury cars under new brands, giving the company product offerings from below 100,000 yuan to more than 1 million yuan.
Among several new cars planned for this year, BYD said Thursday it is launching a new hybrid-powered car in the second quarter with a 120,000 yuan to 150,000 yuan price range. More

ARK Invest is betting big on private tech companies.
“It’s an amazing time to invest in innovation,” the firm’s chief futurist, Brett Winton, told CNBC’s “ETF Edge” this week. “Both venture exposures and public innovation companies are incredibly well valued today to take a long-term investment.” 

Winton worked with the ARK Invest team to create the ARK Venture Fund (ARKVX), a closed end interval fund, in September 2022.
Closed-end interval funds allow investors to invest in private companies at their net asset value at any time, regardless of market volatility. Investors can then sell back to the fund quarterly during specific time frames. 
According to ARK Invest’s website, the fund’s largest private holdings as of April 10 were Epic Games, SpaceX, Freenome and Anthropic.
“Interval funds were designed specifically to allow everyday investors to invest in less liquid assets,” Winton said. “You don’t have to be an accredited investor … and you get to invest at the net asset value.”
As of Thursday’s close, the ARK Venture Fund was up 29% since its inception date. However, it’s off more than 7% year to date.
Disclaimer

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Traders work during the opening bell at the New York Stock Exchange.
Johannes Eisele | AFP | Getty Images

Stocks tumbled Thursday after the latest U.S. economic data showed a sharp slowdown in growth and pointed to persistent inflation.
The Dow Jones Industrial Average slid 375.12 points, or 0.98%, to close at 38,085.80, weighed down by steep declines in Caterpillar and IBM. The S&P 500 dropped 0.46% to finish the session at 5,048.42, and the Nasdaq Composite lost 0.64% to 15,611.76.

U.S. gross domestic product expanded 1.6% in the first quarter, the Bureau of Economic Analysis said. Economists polled by Dow Jones forecast GDP growth would come in at 2.4%.
Along with the downbeat growth rate for the quarter, the report showed the personal consumption expenditures price index increased at a 3.4% pace, well above the previous quarter’s 1.8% advance. This raised concern over persistent inflation and put into question whether the Federal Reserve will be able to cut rates anytime soon. Taken together, both findings suggest a stagflationary environment — that is, a combination of slowing economic growth and rising inflation — and could add another headwind for policymakers moving forward.
“In the short term, the numbers don’t appear to be a green light for either bulls or bears…the uncertainty is unlikely to ease pressures in a market experiencing its deepest pullback since last year,” said Chris Larkin, managing director of trading and investing at E*Trade from Morgan Stanley.
Following the GDP print, traders moved down expectations for an easing of Federal Reserve monetary policy. Fed funds futures trading data suggests there will be just one interest rate cut this year, according to the CME FedWatch Tool.

Tech tumble

The lackluster GDP added further pressure to an already-tense market contending with concerns over a pullback in growth among technology earnings.

Meta plunged 10.5% after the social media giant issued light revenue guidance for the second quarter. International Business Machines also fell 8.3% after missing consensus estimates for first-quarter revenue.
“For all of the attention given to generative AI in the past nine months, the failure of Meta to attain its revenue growth projections in Q1 is raising questions about whether the monetization of this technology is as easy as what traders were led to believe by management,” said Thierry Wizman, global FX and rates strategist at Macquarie.
Meta’s report raises concern ahead of other big tech releases. Microsoft and Alphabet are slated to post earnings after the close Thursday.
Correction: An earlier version misstated the day’s move for the Nasdaq Composite.
4:11 p.m.: Stocks close lower, Dow slides more than 300 points
Stocks closed lower on Thursday, with gross domestic product data fueling growth concerns and pressuring equities.
The Dow Jones Industrial Average pulled back 375.12 points, or 0.98%, to close at 38,085.80. The S&P 500 slipped 0.46% to finish the session at 5,048.42, while the Nasdaq Composite lost 0.64% to 15,611.76.
— Brian Evans
3:30 p.m.: Investor bullishness below historical average for first time since early November
Individual investor bullishness toward the outlook for stock prices slid to 32.1% in the latest week, the lowest since early November, which was also the last time enthusiasm was below the historical average of 37.5%. That marked the end of 25 straight weeks when bullishness was above normal.
The weekly survey from the American Association of Individual Investors showed neutral sentiment regarding the next six months surged to 33.9% from 27.8%. The historical average is 31.5%.
Bearish opinion was little changed at 33.9% vs. 34.0% last week (and above an historical average of 31% for a second week).
— Scott Schnipper
3:01 p.m.: Federal Reserve is ‘boxed in a corner’ after GDP report, strategist says
The softer-than-expected GDP report puts the Fed in a bind with inflation readings heating up, said Mike Cornacchioli, Citizens Private Wealth senior VP for investment strategy.
“The GDP report was two-pronged: bad and ugly,” Cornacchioli said.
And while the GDP pricing data is just one way to look at inflation, the upward trendline is now becoming clear, Cornacchioli said.
“I think we’ve moved past seeing this uptick in inflation being transitory. It’s now a real concern, and continuing data is reinforcing that, which is what the PCE price data shows us. The Fed is kind of boxed in a corner here,” he added.
— Jesse Pound
2:34 p.m.: Stagflation fears are overblown, says BMO’s Yung-Yu Ma
Although GDP in the January-through-March period grew less than expected — while the inflation posted its biggest gain in a year — the economy is at little risk of falling into stagflation, according to BMO Wealth Management chief investment officer Yung-Yu Ma.
“We actually think growth is going to hold up pretty well,” Ma said. Much of the detractors of GDP growth were volatile one-time items, such as inventories, Ma noted, as well as underscoring strength in consumer and business spending.
“We see a pretty healthy and stable growth environment; we aren’t especially concerned about growth pulling back much throughout this year. We actually think there’s a good prospect for acceleration as we go throughout the year,” said Ma.
Ma forecasts prices for most services and goods to moderate in the remainder of 2024.”This GDP report might might actually mark a high point of worry for both inflation concerns and growth this year. We think both are going to turn the corner positive direction,” Ma said. “It might take a little bit of time, but we we don’t we don’t see these trends persisting throughout this year.”
With a forecast for a healthy growth environment, albeit a relatively neutral environment for inflation with regards to the Federal Reserve, Ma believes there is still a favorable backdrop for equities in 2024.”It’s not as favorable — but it’s still a backdrop that we wouldn’t recommend investors take an overly conservative or cautious stance in the face of this outlook,” Ma said.
— Hakyung Kim
1:30 p.m.: Tech investor stands by Meta Platforms, but says stock needs to ‘find support’
Technology investor Paul Meeks is standing by Meta Platforms despite Thursday’s sell-off, but said it’s too soon to snatch up shares just yet.
The stock needs to “find support for at least a few trading session, so I’m more confident that the short-term selling has been exhausted,” said the co-chief investment officer and portfolio manager at Harvest Portfolio Management.
Meeks considers himself a long-term owner of the stock, but said he’s waiting for more earnings reports to trickle in. This includes results from his favorite AI names Nvidia and Advanced Micro Devices.
— Samantha Subin
1:15 p.m.: Meta’s AI spending could benefit these stocks
Meta Platforms is down nearly 12% in midday training as investors react to the news that it will take a while to see the full benefits of the company’s rising investments in artificial intelligence. But one company’s loss could be another’s gain. As Meta’s spending could turn into bigger revenue at Super Micro, Arista Networks, Pure Storage, Broadcom and AMD, according to Wells Fargo.
Analyst Aaron Rakers estimates Meta was an approximately 10% customer for Super Micro in the fourth quarter of 2023, and for Pure Storage last year.
Arista Networks, which makes ethernet-based AI cables and other products, received about 21% of last year’s revenue from Meta, he said.
Rakers also said Meta has been using Broadcom’s custom networking chips and was one of the first customers for its new AI chip, the MI300X.
Chip stocks were trading higher on Thursday, against the broader market’s steep decline.
—Kristina Partsinevelos, Christina Cheddar Berk
12:41 p.m.: Check out the stocks making headlines in midday trading:

Victoria’s Secret — Shares dropped 3.5% after Goldman Sachs initiated coverage of the stock with a sell rating, saying it sees a “tough macro and ongoing competitive pressure” for the lingerie company in the near term. Longer term, the firm is constructive on the company’s loyalty initiatives and renewed merchandise focus.
Meta Platforms — The Facebook-parent company plunged more than 11%. Meta reported lighter-than-expected second-quarter revenue guidance on Wednesday, and CEO Mark Zuckerberg spoke about spending in areas such as AI and mixed reality that are not currently profitable.
Tech stocks — Shares of major tech giants dropped on Thursday as Meta’s lackluster revenue outlook led to declines across the sector. Microsoft and Alphabet shares dropped roughly 3% and 2%, respectively, ahead of their earnings due after the bell. Amazon’s stock price shed 2%.
Monster Beverage — JPMorgan downgraded Monster Beverage to neutral from overweight due to “cost pressure,” pushing shares roughly 3% lower.

For the full list, read here.
— Pia Singh
12:40 p.m.: Developed markets are showing signs of pressure from escalating geopolitical tensions, falling expectations of rate cuts and a recent equity sell off.
All of the major EPFR-tracked Developed Markets Equity Fund groups, with the exception of Canada Equity Funds, experienced net redemptions during the week ending April 17, according to EPFR.
During the period, U.S. equity funds saw their third outflow in five weeks.
— Hakyung Kim
12 p.m.: Thursday sell-off pulls Dow into negative territory on the week
Thursday’s drop yanked the Dow below its flatline for the week, underscoring the magnitude of the daily loss.
The blue-chip average tumbled more than 1.5% in late morning trading. It was now down about 0.4% on the week, despite pacing for a gain of more than 1% heading into the session.
With that decline, the Dow sat within 0.5% of its flatline for 2024.
While the S&P 500 and Nasdaq Composite also fell in Thursday’s session, both remained on track to end the week higher. The broad S&P 500 was poised to finish up by 0.8%, while the technology-heavy Nasdaq was heading toward a 1% gain.
— Alex Harring
11: 24 a.m.: Chipmaker ETFs are a rare bright spot for investors Thursday
Semiconductor ETFs are performing well on Thursday even as the broader market struggles.
The VanEck Semiconductor ETF (SMH) was up about 0.7% on the session, while the Invesco PHLX Semiconductor ETF (SOXQ) was up about 0.9%.
The iShares Semiconductor ETF (SOXX) added about 0.5%.Nvidia was helping to lead the group higher, rising more than 2%. The chip giant had a 10% sell-off of its own last week, but is starting to claw back those losses.
— Jesse Pound
10:46 a.m.: IBM and Caterpillar lead Dow lower
The Dow has dived almost 700 points in early Thursday trading, putting the blue-chip average on track for its worst day this year.
IBM and Caterpillar led the 30-stock index into the red, dropping more than 9% and 7%, respectively, on the back of earnings. Both missed analyst estimates for revenue in the quarter.
Big technology names Microsoft and Amazon were the next worst performers, shedding nearly 4% and 3%, respectively.
More than two out of every three Dow stocks traded down in the session. Merck, which reported better-than-anticipated earnings this morning, and UnitedHealth bucked the downtrend, with each up more than 1% in the session
— Alex Harring
10:22 a.m.: Meta shares on pace for worst day since October 2022
Meta Platforms shares plummeted 11.34% on Thursday. The losses put the stock on pace for its worst day since October 27, 2022, when Meta declined 24.56%.
Shares fell after Meta issued weak revenue guidance that overshadowed its better-than-expected earnings in the first quarter. The sell-off intensified following CEO Mark Zuckerberg’s comments on the company’s long-term investments in artificial intelligence and the metaverse.

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Meta shares on Thursday

— Hakyung Kim
10:04 a.m.: New York Stock Exchange decliners lead advancers 10-1
About 10 stocks traded lower at the New York Stock Exchange on Thursday for every one advancer, as the latest GDP report and new tech earnings dampened investor sentiment. Overall, 2,386 NYSE-listed stocks fell, while 210 advanced.
— Fred Imbert
9:52 a.m.: The U.S. GDP report was the ‘worst of both worlds,’ investor says
A disappointing U.S. GDP print could spell trouble ahead for the equity market if inflation continues to prove sticky, one investor said.
“This report was the worst of both worlds: economic growth is slowing and inflationary pressures are persisting,” wrote Chris Zaccarelli, investment chief at Independent Advisor Alliance.
“The Fed wants to see inflation start coming down in a persistent manner, but the market wants to see economic growth and corporate profits increasing, so if neither are headed in the right direction then that’s going to be bad news for markets,” he continued.
The data also raises the stakes for the personal consumption expenditures report that is set to release Friday. Investors are hoping the PCE report, which is the Fed’s preferred measure of inflation, will show an improvement in pricing pressures after the March consumer inflation report came in hotter than expected.
— Sarah Min
9:33 a.m.: Stocks fall after GDP data shows slowing economic growth
Stocks opened lower on Thursday, with equities selling off after fresh gross domestic product data signaled signs of slowing economic growth.
The Dow Jones Industrial Average pulled back 500 points, or 1.3%. The S&P 500 pulled back 1.4%, while the Nasdaq Composite lost 2.3%.
— Brian Evans
8:58 a.m.: 10-year Treasury yield jumps to highest level since November
The 10-year Treasury yield broke above 4.7% following the GDP report, hitting its highest level since November.

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The benchmark Treasury rate topped 4.7% on Thursday.

While slowing economic growth could be a factor that pushes the Federal Reserve toward rate cuts, the rising prices shown in the GDP report could cause the central bank to hold rates steady until inflation recedes.
— Jesse Pound
8:51 a.m.: Gross domestic product slowed in the first quarter
U.S. gross domestic product slowed in the first quarter, the Bureau of Economic Analysis said Thursday, which weigh on stock futures before the opening bell.
GDP expanded 1.6% in the first quarter, while economists polled by Dow Jones forecast growth of 2.4%.
— Brian Evans More

Deutsche Bank on Thursday reported 1.275 billion euros ($1.365 billion) in net profit attributable to shareholders in the first quarter, marking a 10% annual increase.
Analysts had forecast a net profit result of 1.23 billion euros for the period, according to LSEG data.
Revenue rose 1% year-on-year to 7.8 billion euros, which the bank attributed to growth in commissions and fee income, along with strength in fixed income and currencies.

Deutsche Bank shares popped to a more than six-year high on Thursday afternoon, after the German lender reported a 10% rise in first-quarter profit, beating expectations amid an ongoing recovery in its investment banking unit.
After declining in the morning, shares were up 7.2% at 1:27 pm in London, hitting the highest intraday level since December 2017, according to LSEG data.

Net profit attributable to shareholders was 1.275 billion euros ($1.365 billion) for the period, ahead of an aggregate analyst forecast of 1.23 billion euros for the period, according to LSEG data.
Deutsche Bank said this was its highest first-quarter profit since 2013. It also marks the bank’s 15th straight quarterly profit.
Group revenue rose 1% year-on-year to 7.8 billion euros, which the bank attributed to growth in commissions and fee income, along with strength in fixed income and currencies. The revenue print also came in ahead of an analyst forecast of 7.73 billion euros, according to LSEG.
Revenues at its investment bank increased 13% to 3 billion euros, following a 9% slump through full-year 2023 which had dragged down overall profit. The performance restores the division as Deutsche Bank’s highest-earning unit on growth in financing and credit trading revenue.
Other first-quarter highlights included:

Net inflows of 19 billion euros across the Private Bank and Asset Management divisions.
Credit loss provision was 439 million euros, down from 488 million in the fourth quarter of 2023.
Common equity tier one (CET1) capital ratio — a measure of bank solvency — was 13.4%, compared to 13.6% at the same time last year.

“There’s momentum in the businesses, actually across all four businesses, and we do think it’s sustainable,” Deutsche Bank Chief Financial Officer James von Moltke told CNBC’s Annette Weisbach on Thursday.
“We’re delivering on our commitments on costs and capital returns in the quarter.”
Germany’s biggest lender reported net profit of 1.3 billion euros in the prior quarter and of 1.16 billion euros in the first quarter last year.
In 2023, the bank announced it would cut 3,500 jobs over the coming years, as it targets 2.5 billion euros in operational efficiencies to boost profitability and increase shareholder returns.
In a research note Thursday, analysts at Keefe, Bruyette & Woods called the group results “reasonable” but “nothing special,” highlighting strong investment bank figures but underperformance in its corporate bank and asset management divisions.
Credit losses remained elevated while guidance was unchanged despite the higher interest rate expectations, they added. More

Sovereign wealth funds seldom worry about foreign policy. Those that invest abroad typically do so in order to ensure stable returns or diversify holdings, meaning they tend to hold Treasuries and Western stocks. Many have started to spend more at home in order to advance national growth plans. But ADQ, one of the United Arab Emirates’s wealth funds, is heading in a different direction.With $199bn of assets under management, an amount equivalent to two-fifths of the UAE’s GDP, the fund has decided to take a new approach. Although more than 80% of its capital is tied up in domestic infrastructure and related firms, such as Etihad Airways and AD Ports, this reflects spending in the years after the fund was established in 2018. The new ambition is to exert the UAE’s influence abroad—on which it is willing to spend big.Investments by Etihad and AD Ports, in things such as a cargo operator and a Congolese port, have made ADQ one of the most active wealth funds in Africa. Last year it signed $11.5bn of deals with Turkey, including in export financing and post-earthquake reconstruction; it is also in discussions about financing a railway across the Bosporus Strait, which would create a trade route linking Asia, Europe and the Middle East. ADQ’s biggest deal yet was signed in February, when the fund provided $24bn of a $35bn package to rescue Egypt from default. Rather than merely bankrolling the deal, ADQ’s cash bought a stretch of the country’s Mediterranean coast, which will become a holiday destination, financial hub and free-trade zone.This frenetic activity reflects the UAE’s belief that it has an opportunity to exert influence. Saudi Arabia is turning inward as it focuses on its “Vision 2030” agenda, intended to reduce its reliance on oil. The kingdom’s share of bail-outs in the Middle East fell to 39% in the decade to 2022, down from 65% in the four decades before that. Other countries in the Gulf are now rushing to spend, and the UAE is eager to win the race for influence.ADQ’s investments are particularly attractive to potential recipients as they are akin to private-equity stakes. Much as buy-out barons take on illiquid investments, and then focus on improving operations, so ADQ attempts to expand ports and property empires, rather than passively sitting on purchases.Thus ADQ’s investments often go hand-in-hand with trade deals, including one signed with Kenya on April 24th. The fund has joint ventures with countries including Azerbaijan, Jordan and Oman, all three of which have inked such agreements. It is also investing alongside Egypt and Turkey. As an ADQ paper states, such alliances align research-and-development efforts and create strategies to benefit portfolio firms with similar interests. They also forge closer alliances and help spread risk.Emirati rulers do not just want more influence over the countries that receive their investments, however. After ADQ’s deal with Egypt, for instance, the fund was able to help complete an IMF deal. Following this, the Egyptian pound was allowed to trade more freely, and duly sank. But for now the country is no longer teetering on the edge of collapse—and ADQ was able to get a difficult deal over the line. This will have boosted the UAE’s standing in Washington and beyond.Financial results are less of a concern for the wealth fund’s administrators. ADQ has not been set explicit targets, as is typical with other similar institutions. Its reports do not provide many figures. “Our impact extends beyond financial returns, transcending social barriers with an immediate effect on people’s livelihoods,” Jaap Kalkman, ADQ’s investment boss, has said. Or to put it more plainly: mixing foreign-policy goals and investments is hardly a formula for guaranteed returns. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

The sound of alarm bells is becoming harder to ignore. America’s stockmarket finished the first quarter of 2024 on an astonishing tear, with its benchmark S&P 500 index having risen in 18 out of the preceding 22 weeks. No longer: it has fallen over each of the past three. Look at individual stocks, meanwhile, and it is clear just how far investors have swung from euphoria to twitchiness. Nvidia was the poster child of the S&P 500’s winning streak, seeing its share price more than double between October and March. On April 19th it fell by a gut-churning 10% over the course of a single day, wiping more than $200bn from the company’s market value. The awful news that precipitated the plunge? There wasn’t any.If there is a reason for this attack of the vapours, it is that the prospect of cheaper money is receding into the distance. American consumer prices rose by 3.5% in the year to March. That is far too high for the Federal Reserve to consider cutting interest rates imminently unless something calamitous happens. Thus investors have pared their bets accordingly. But something else is going on, too. As the size of the Nvidia jolt suggests, turning-points have less to do with sober-headed analysis than mob psychology. Markets have recovered a bit in recent days, suggesting plenty of uncertainty. The question now is whether the mood will continue to darken.That will be determined by the mob. Yet as investors ponder whether or not to panic, America’s stockmarket is in an unusually precarious position. Shares have rarely been valued more highly than they are today, giving them further to fall and making them more vulnerable to changing investor sentiment. Relative to ever higher interest rates on government bonds, expected returns on stocks look especially unattractive. If a crash does loom, all the pieces are in place for it to be particularly nasty.Take valuations first. The cyclically adjusted price-earnings (CAPE) ratio, which was popularised by Robert Shiller of Yale University, is now higher than it was even in the late 1920s. The ratio’s current level has been exceeded only around the turn of the millennium and in 2021. Both occasions preceded market crashes. And a high CAPE is more than just a bad omen. A lot of academic work has demonstrated that the earnings yield—or inverse of the price-to-earnings ratio—on stocks is a reasonably good predictor of their future returns. This makes intuitive sense, given that a company’s earnings are the ultimate source of its value.The CAPE ratio is an especially useful signal because it incorporates ten years’ worth of earnings, smoothing out noise. When it is elevated, expected future returns are low—and at present, it is nearly twice as high as its long-run average. Reversion to anywhere near the mean would take an earth-shaking drop. Worse, the high CAPE makes such a fall more likely, by giving investors reason to dump low-yielding stocks.Couple this with a renewed acceptance that high interest rates are here to stay, and things look shakier still. Just as the earnings yield is a proxy for stocks’ expected returns, so real yields on government bonds indicate their expected returns. The gap between the two therefore measures the additional reward investors anticipate for holding riskier shares over safer government debt. It varies over time according to the prevailing risk appetite, but has seldom been as low as its current two percentage points.A reversion to the average, which is around four percentage points, would entail share prices dropping by 29% at current bond yields. It seems improbable, however, that investors’ risk appetites would still be average immediately after such a large drop. For much of the 2010s the yield gap hovered around six percentage points; in the traumatic years following the financial crisis of 2007-09, it was more like eight. A return to those levels would require share-price crashes of 47% and 57%, respectively.Put all this to a Wall Street bull and the retort is straightforward: earnings will grow, possibly supercharged by artificial intelligence. It is this which will drive future returns, such that low yields based on past profits are meaningless. Yet the past few decades suggest otherwise. Low earnings yields might indeed indicate that earnings will rise, but historically they have portended poor returns instead. Perhaps this time is different—and even if that is not the case in the long run, share prices could keep rising for a while yet. Once the mood does turn, though, watch out. ■Read more from Buttonwood, our columnist on financial markets: Why the stockmarket is disappearing (Apr 18th)What China’s central bank and Costco shoppers have in common (Apr 11th)How to build a global currency (Apr 4th)Also: How the Buttonwood column got its name More