STORY: U.S. stocks closed lower Thursday as U.S. economic growth came in softer than forecast and inflation remained persistent.

The Dow dropped about one percent, the S&P 500 slipped roughly half of one percent and the Nasdaq lost two-thirds of one percent.

Data on Thursday showed the economy grew at its slowest pace in nearly two years in the first quarter while the pace of inflation accelerated to a level well above the Federal Reserve's two percent target.

That dampened hopes the Fed would begin cutting interest rates this year.

While the economy only grew at 1.6% overall, Scharf Investments Managing Director Eric Lynch said the number is better than it appears as consumer spending remains solid.

"If you look underneath it, on the growth side, it really wasn't as bad as the headline might make those you know feel at first. Basically, underneath it, really, what hit it was a reduction in inventory and a single-digit high, single-digit growth and exports, so that really detracted from GDP. But consumption really came in at 2.5% a little wider than free, but still fairly strong."

Technology stocks fell on Thursday, following a disappointing forecast from Meta Platforms.

But, after the closing bell, Microsoft and Google-parent Alphabet posted strong results that could set the sector up for gains on Friday.

Other stocks on the move included Caterpillar.

Shares lost 7% after the company cut second-quarter sales forecasts as demand for its construction equipment eases from last year's boom.

And shares of Southwest Airlines fell about 7% as the airline slashed its projections for new aircraft deliveries from Boeing in 2024 for the third time.