Wall Street Pulls Back as Economic Data Weighs on Markets
NEW YORK — U.S. stock markets declined Wednesday as fresh data showed the first contraction in U.S. economic growth in three years. Investors also braced for major earnings reports from leading tech firms, adding to the cautious sentiment.
- The S&P 500 fell approximately 0.8%
- The Nasdaq Composite declined by 1.2%
- The Dow Jones Industrial Average slipped about 0.4%, after recently notching its longest win streak of 2025
These moves come as Wall Street approaches the close of a volatile April marked by heightened trade tensions between the U.S. and China. The Dow is on pace for a monthly loss of just over 3%.
GDP Contracts as Imports Surge
The U.S. economy shrank at an annual rate of 0.3% in the first quarter, according to the Bureau of Economic Analysis. This marks a sharp reversal from the 2.4% growth recorded in Q4 2024.
The downturn was attributed largely to a spike in imports, as businesses stocked up amid uncertainty over President Donald Trump’s new tariff policies, part of a broader U.S.-China trade confrontation. Economists had anticipated a smaller contraction of 0.1%.
Slowing Job Growth and Persistent Inflation
Earlier in the day, ADP’s private payrolls report indicated a pullback in hiring in April. The report cited a “difficult” business climate, with many companies expressing caution in the face of policy shifts and cost pressures.
Meanwhile, the core Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation measure, showed a 3.5% annual increase in the first quarter—exceeding expectations of 3.2% and above the prior quarter’s 2.6%.
These figures suggest inflation remains a concern, complicating the Federal Reserve’s interest rate outlook despite recent signs of easing in March.
Big Tech Earnings in Focus
Investors are now turning their attention to earnings from major tech companies. Microsoft (MSFT) is scheduled to report after the market close, with analysts watching closely for signs of revenue growth tied to AI investments.
Meta Platforms (META) will also release its quarterly results later today, with questions looming over how international tariffs may impact advertising revenue and operational costs.
Wall Street sentiment has been mixed. Some traders anticipate that the Trump administration could moderate its tariff strategy, potentially easing market pressure.
Looking Ahead
The market’s performance this week will hinge heavily on tech earnings and any developments in U.S.-China trade negotiations. With economic data highlighting both slowing growth and persistent inflation, investors are balancing near-term caution with hopes for policy clarity.
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