Finance

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.

Stock chart icon

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.

Stock chart icon

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

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A fifth of American workers have a non-compete clause in their contract, barring them from leaving to join a rival. Owing to a new rule issued by the Federal Trade Commission on April 23rd, these clauses may soon be voided. Advocates hope this will inject dynamism into the American economy and lead to stronger wages; critics warn it will stifle investment.The debate about non-compete clauses is an old one, dating back to Europe in the 1400s. Courts generally came down on the side of apprentices trying to escape the clutches of their mentors. In the Industrial Revolution, though, views shifted. The main argument in support of non-compete clauses—then and now—is that they protect firms with an understandable interest in defending trade secrets. With them in place, companies become more willing to make hefty investments and train up workers, confident that they will reap the benefits from both. A recently published study by Jessica Jeffers of HEC Paris found that when American states make non-competes easier to enforce, firms increase their physical investments by as much as 39%.Unfortunately, many bosses abuse the power that such control gives them. In one risible example from 2014 a worker at Jimmy John’s, a sandwich chain, shared a copy of the company’s contract terms, which barred staffers from jumping to any competitor within two years of leaving. Sandwich artists are not the only Americans doing basic jobs who are so constrained. Studies have found that about 10% of those on minimum wages, from barbers to waiters, face similar restrictions.Even for highly skilled employees, the merits of these limitations are questionable. California, home to many of the world’s most disruptive tech firms, has long prohibited companies from stopping employees who wish to join rivals. Ms Jeffers’s research points to a trade-off: although existing firms benefited from job-hopping restrictions, she found such rules led to a 7% fall in new companies entering knowledge-intensive sectors. They thus represent an impediment to innovation.The tide has been turning against non-competes in America. At least ten states have blocked their use for low-wage workers. On April 23rd the FTC upped the ante, voting for a sweeping ban. Under the rules, existing non-competes for executives making over $151,164 a year can be maintained, but all other non-competes will no longer be enforced, and employers will be barred from creating any new ones, including for executives. The FTC anticipates that the ban will lift the rate of business creation by 3% and increase earnings for the average worker by about $500 per year.For Lina Khan, the Biden-appointed head of the FTC, the ban would be a rare accomplishment in her otherwise wayward campaign to re-engineer competition law in America, as she tries to take on the power of big companies. Whether the ban will actually go into force in six months, as scheduled, is uncertain. Almost immediately the US Chamber of Commerce sued the FTC in a Texas court, arguing that although the agency can challenge specific business practices, it lacks the constitutional authority required to create regulation. The ban, in other words, will come down to another competition debate: whether federal agencies have the right to compete with Congress in making rules. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

Where other historians saw a mob of hungry peasants, E.P. Thompson saw resistance to capitalism. Studying England’s 18th-century food riots, the Marxist historian coined the term “moral economy”. The rioters, he argued, were not motivated purely by empty bellies, but by a belief that the bakers, farmers and millers had violated paternalist customs, which suggested they should limit their profit, sell locally and not hold back grain. Gradually, Thompson argued, the moral economy was being displaced by a market economy, in which prices follow the amoral logic of supply and demand, rather than ideas of what would be a “fair price” in times of scarcity.Americans may not be rioting over bread prices, but they are angry. President Joe Biden now faces a tight race for re-election. Swing voters are particularly annoyed about inflation, as the price level has risen by a cumulative 19% since Mr Biden’s inauguration. Yet this frustrates many left-wing economists, who see the tight labour market and rising real wages in America as a great success. To them, inflation is an irritating—and now stubborn—by-product of the mixture of fiscal stimulus and industrial policy pursued by Mr Biden. It is not the main story.A new working paper by Stefanie Stantcheva of Harvard University helps explain the divergence. Ms Stantcheva asks, “Why do we dislike inflation?”, which updates a paper published in 1997 by Robert Shiller, who later won a Nobel prize in economics. Using two surveys, she posed Americans a series of closed questions, such as “How have your savings been affected by inflation?”, and open-ended ones, such as “How would you define ‘inflation’ in your own words?”. The results show that Thompson’s concept of the “moral economy”, which he thought had been displaced by the cold logic of the market, still has popular appeal.Americans who responded to Ms Stantcheva’s surveys were angry for a number of reasons. Most believed that inflation inevitably meant a reduction in real incomes. They said that rising prices made life more unaffordable and prompted them to worry they would not be able to afford the basics. Respondents did not see a trade-off between inflation and unemployment—referred to as the “Phillips curve” by economists—but thought that the two would rise in parallel. Some 70% did not view inflation as a sign of a booming economy, but as an indication of one in a “poor state”. Around a third saw reducing inflation as a bigger priority than financial stability, reducing unemployment or increasing growth. In short, respondents really hated rising prices.Some of their beliefs reflected what has happened during the current spell of inflation. Following the covid-19 pandemic, real incomes did indeed fall, as prices rose faster than wages. It is only over the past couple of years that wages have grown sufficiently to make up the difference. The price of basics, such as food and fuel, has risen faster than other items in the inflation basket. And even if your income is rising, it is irritating to see a greater share go on necessities. Nor does inflation always accompany a strong labour market. During the global financial crisis of 2007-09, for instance, high commodity prices produced a situation in which inflation rose at the same time as the global economy weakened. During the inflation of the 1970s, which looms large in the popular memory, unemployment rose.Why, then, are some economists more relaxed about rising prices? Inflation does present difficulties: it can undermine central-bank credibility and causes arbitrary redistribution from creditors to debtors. The constant updating of prices also carries costs for companies. Yet if all prices are adjusting at the same rate, the change is not as consequential as many workers believe. It no more means that workers are getting poorer than measuring someone’s height in feet rather than centimetres would mean that they are getting shorter. What is more, inflation is often the consequence of a hot labour market, as is the case in America at the moment. It should, therefore, be accompanied by low unemployment and rising wages, which help compensate for the irritation of prices changing more frequently.Thin gruelMuch like rioters in 18th-century England, Americans believe that price rises are fundamentally unfair. Respondents to Ms Stantcheva’s surveys suggested that inflation widened the gap between rich and poor, while businesses allowed prices to rise because of corporate greed. They also “tend to believe that employers have a lot of power and discretion in setting wages”, notes Ms Stantcheva. In their view, inflation is not a phenomenon that emerges from hundreds of millions of people taking trillions of decisions. It is something inflicted on them by people at the top of totem pole.Yet workers still gave little credit to businesses or the government for an astonishingly strong labour market. Wage rises were generally seen as the responsibility of the individual: a well-deserved reward for hard work. Those survey respondents who had received a pay rise were twice as likely to attribute it to their on-the-job performance as to inflation. However persuasive left wing-economists may be, Americans will not thank the Biden administration for what they see as their own success.Riots are often counter-productive. In 18th-century England, according to Thompson, terrified farmers decided not to bring their crops to market. Shortages worsened in other parts of England as speculators were intimidated into keeping purchases in storage, rather than shipping them across the country. In a moral economy concerns about what is right and wrong outweigh efficiency, imposing a cost on those assigning blame as well as those being blamed. That does not make it any more comfortable for those being judged, as Mr Biden is now all too aware. ■Read more from Free exchange, our column on economics:Can the IMF solve the poor world’s debt crisis? (Apr 18th)What will humans do if technology solves everything? (Apr 9th)Daniel Kahneman was a master of teasing questions (Apr 4th)For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

 Barclays on Thursday reported first-quarter net income attributable to shareholders of £1.55 billion ($1.93 billion), beating expectations.
Analysts polled by Reuters had expected net profit attributable to shareholders of £1.29 billion for the quarter, according to LSEG data.
Barclays reported a net loss of £111 million in the fourth quarter of 2023 due to an operational shake-up designed to reduce costs and improve efficiencies.

Signage shines through a window reflecting Barclays head office in Canary Wharf, London, U.K.
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LONDON — Shares of Barclays rose 4% on Thursday after the bank reported first-quarter net income attributable to shareholders of £1.55 billion ($1.93 billion), beating expectations and returning the British lender to profit amid a major strategic overhaul.
Analysts polled by Reuters had expected net profit attributable to shareholders of £1.29 billion for the quarter, according to LSEG data.

The bank’s shares were up 4.1% by 9:50 a.m. London time.
Pre-tax profits, however, were down 12% to £2.28 billion from $2.6 billion a year earlier, as the bank braces to implement its extensive revamp plans.
Here are some other highlights:

First-quarter group revenue was £6.95 billion, down 4% from the same period last year.
Credit impairment charges were £513 million, compared with £524 million in the first quarter of 2023.
Common equity tier one (CET1) capital ratio, a measure of bank’s financial strength was 13.5%, down from 13.8% in the previous quarter.
Full-year return on tangible equity (RoTE) was 12.3%.
Quarterly total operating expenses were up 2% year-on-year at £4.2 billion.

Barclays reported a net loss of £111 million in the fourth quarter of 2023 due to an operational shake-up designed to reduce costs and improve efficiencies.
CEO C.S. Venkatakrishnan said the bank’s first-quarter results showed it was committed to implementing its overhaul plans, including via further investment in its U.K. consumer business and through its acquisition of Tesco Bank, which expected to complete in the fourth quarter of this year.

“We are focused on disciplined execution of the plan that we presented at our Investor Update on 20th February,” he said in a statement.
The revamp plans included a £900 million hit due to structural cost-cutting measures, which the bank said were expected to lead to gross cost savings of around £500 million in 2024, with an expected payback period of less than two years.
The overhaul saw the reorganization of the business into five operating divisions, separating the corporate and investment bank to form: Barclays U.K., Barclays U.K. Corporate Bank, Barclays Private Bank and Wealth Management, Barclays Investment Bank and Barclays U.S. Consumer Bank.
The bank also pledged to return £10 billion to shareholders between 2024 and 2026 through dividends and share buybacks.
Will Howlett, financials analyst at Quilter Cheviot, said in a Thursday note that the first-quarter results were a “promising start,” indicating that the bank is adhering to the financial roadmap outlined in its 2023 full-year results.
“With a solid start to the year, Barclays is poised to reshape its valuation narrative and deliver on its promises to shareholders,” Howlett said.
“The reiteration of profitability targets, aiming for a return on tangible equity (RoTE) of over 10% in 2024 and over 12% in 2026, reflects a consistency in Barclays’ ambitions despite previous setbacks.”
— CNBC’s Elliot Smith contributed to this report. More