US stocks were firmly lower on Wednesday after the US GDP unexpectedly contracted in the first quarter, underscoring the negative initial impact of tariff threats and uncertain economic policy by President Trump. The S&P 500 fell 2%, the Dow dropped nearly 600 points, and the tech heavy Nasdaq slumped 3% ahead of earnings releases among its key members.
The US GDP contracted at an annualized 0.3% in the March quarter, contrasting with expectations of a 0.3% expansion amid softer consumer spending and soaring imports to undercut tariffs, while headline and core PCE prices accelerated more than expected. Additionally, employment growth measured by the ADP plunged. Equities were also pressured by the series of pessimistic earnings results, as corporate giants across all sectors abandoned their guidance due to economic uncertainty.
Caterpillar, seen as an economic barometer, eased after lowering sales targets. Microsoft and Meta dropped 2% and 2.5%, respectively, ahead of their earnings.
Source: Trading Economics
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