Stocks tumbled out of the gate Thursday after a downgrade on brokerage stocks and disappointing earnings from two tech giants.
Readings on GDP and jobless claims pushed sentiment even deeper underwater.
The Dow Jones Industrial Average was down more than 100 points, or 1 percent, in the first few minutes of trading. The S&P 500 and Nasdaq were each down more than 1 percent.
The third and final reading on first-quarter GDP showed the economy grew at a 1 percent annual rate, up slightly from prior estimates of 0.9 percent and 0.6 percent, the Commerce Department reported. Consumer spending, which accounts for more than two-thirds of national economic activity, rose by 1.1 percent in the quarter amid an increase in medical-care services but was still at its lowest level since the second quarter of 2001. A gauge of business spending rose 0.6 percent, up from the prior estimate of a 0.2 percent drop.
An inflation gauge rose at a 3.6 percent rate during the quarter. Core inflation, which excludes volatile food and energy costs, increased at a 2.3 percent pace, down slightly from the fourth quarter's 2.5 percent rate, but still outside the Fed's comfort zone which caps out at 2 percent.
Jobless claims for last week were unchanged but the four-week moving average climbed by 2,250 claims to 378,250, the highest level in nearly three years.
Goldman Sachs cut its rating on U.S. brokerage firms to "neutral" from "attractive" as there aren't any catalysts to move the stocks higher in the coming months.
Citigroupmay incur second-quarter writedowns of $9 billion and raise additional capital, while Merrill Lynch will incur $4.2 billion of writedowns in the second quarter, a Goldman analyst said in a research note, widening losses expectations for both banks.
Goldman Sachs also cut General Motors to "sell" from "neutral", reducing its price target to $11 from $19.
In the technology sector, Research In Motion, the maker of the Blackberry smart phone, reported a higher first-quarter profit Wednesday, but its shares dropped sharply in after-hours trading as the results and outlook fell short of analysts' expectations, and then tumbled another 10 percent at the open today.
Software maker Oracle reported a higher quarterly profit, beating Wall Street estimates, as new software license revenue climbed 27 percent, but its shares fell more than 3 percent in premarket trading as its financial chief said the firm sees software license sales growth softeningin the current quarter. Its shares fell more than 3 percent.
In mergers and acquisitions news, Anheuser-Buschis expected to reject InBev's unsolicited $46.3 billion offer as too low and outline its own restructuring plan, the Wall Street Journal reported.
In earnings news, Lennar, the second-largest U.S. home builder, reported a smaller quarterly net loss as it cut expenses by 60 percent, but the results were worse than expected as deliveries and new orders tumbled.
On the economic front, Warren Buffett warned that U.S. inflation is "exploding", despite the fact that the Fed held rates unchanged.
At 10 investors will get a glimpse of the housing sector, with existing home sales figures for May. They are expected to have risen slightly to an annual pace of 4.95 million compared with April's 4.89 million, according to Briefing.com.