A trader works on the floor at the New York Stock Exchange (NYSE) at the opening bell on April 29, 2025 in New York City.
Angela Weiss | Afp | Getty Images
Stocks fell on Wednesday, spoiling a stock market comeback in April, as data showed the U.S. economy contracted in the first quarter, raising fears the economy was slipping into a recession under the weight of President Donald Trump’s flurry of policy moves, especially on trade.
The Dow Jones Industrial Average shed 281 points, or 0.7%. The S&P 500 was off 1%, while Nasdaq Composite tumbled 1.4%.
First quarter gross domestic product declined at a 0.3% rate, the Commerce Department said on Wednesday, a rapid reversal from a 2.4% increase in the fourth quarter. Some traders noted that the figures were skewed by a 41% surge in imports in the last quarter as companies looked to get ahead of Trump’s tariffs. However, the report also showed a big slowdown in consumer spending and a decline in government spending amid Elon Musk’s DOGE cuts.
The sour GDP data put a damper on what has been a remarkable comeback in stocks for April. Trump’s sweeping “reciprocal” tariff announcement on April 2 sent the stock market into a tailspin, with the S&P 500 down more than 11% at one point for the month and off by nearly 20% from its February record. A comeback ensued as Trump walked back the stiffer duties, and the S&P 500 heading into Wednesday was down just about 1% for the month.
The major averages ended Tuesday higher after Commerce Secretary Howard Lutnick told CNBC that the White House was close to announcing a trade deal, but didn’t name the country. Later in the afternoon, Trump said that tariff negotiations with India are “coming along great” and that the U.S. could soon strike an agreement with the nation.
But the selling returned on Wednesday, with the weak GDP report raising concerns that the chaos caused by Trump’s policy flurry may have already pushed the economy toward a recession before any substantial trade deals are enacted.
In a post on Truth Social, Trump blamed a “Biden ‘Overhang'” following the weak numbers, telling people to “BE PATIENT!!!” and that his policies “will take a while” to take effect.
“The continual sequence of policy reversals has led to very high levels of uncertainty for businesses and investors,” said Scott Helfstein, head of investment strategy at Global X ETFs. “This report should be a canary in the coal mine for the new administration, but perhaps their willingness to inflict economic pain in pursuit of the long-term goals was underestimated.”
First Solar shares plunged more than 7% after chief executive Mark Widmar said that the president’s tariffs pose a “significant economic headwind” for the solar technology company’s manufacturing facilities, slashing its full-year forecast in response. GE Healthcare also cut its outlook for the year to account for the impact from tariffs.
Meanwhile, shares of artificial intelligence chip darling Nvidia fell more than 2% in sympathy with server maker Super Micro Computer’s 15% decline. Super Micro issued weak preliminary results for the fiscal third quarter.
