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 230 points, or 0.6%. The S&P 500 was off almost 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.
Other data pointed to an economy that was hanging in there. While consumer spending for the first quarter marked its slowest quarterly gain since the second quarter of 2023, spending still came in better than expected in March, as a separate report revealed that it was up 0.7% last month. That's above the 0.5% that was expected.
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 9% 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 2% in sympathy with server maker Super Micro Computer's 15% decline. Super Micro issued weak preliminary results for the fiscal third quarter.
Despite stocks sliding on Wednesday, six tickers in the S&P 500 hit new 52-week highs.
Of these names, five stocks were trading at new all-time highs. Names that hit this milestone included:
On the flip side, three stocks in the index were trading at new 52-week lows: UnitedHealth, Enphase Energy and Alexandria Real Estate Equities.
- Christopher Hayes, Lisa Kailai Han
Energy stocks in the S&P 500 are tracking for their biggest monthly slide since 2020 and worst April in history.
The broad index's energy sector has tumbled around 14.5% since April began. A chunk of those losses came on Wednesday, with the sector sliding more than 3% in midday trading.
If that holds through Wednesday's closing bell, the energy sector would notch its worst month since September 2020, when the group plunged 14.6%. It would also be the worst April in the sector's history going back to 1989.
APA led the sector down, cratering more than 26% in April. Halliburton and Schlumberger were the next biggest losers, with both plunging more than 20%.
Every stock in the sector is on pace to end the month in the red.
With April winding to a close, here are the five largest S&P 500 gainers this month, as of midday trading:
- Sean Conlon, Adrian van Hauwermeiren
Shares of Snap fell more than 15% in morning trading Wednesday after the social media company withheld its outlook for the second quarter, pointing to the impact of macroeconomic uncertainty on advertising demand.
Shares have suffered in recent weeks in the wake of President Donald Trump's tariffs, falling about 13% since his announcement earlier this month. The stock is on pace to end April with a loss of more than 11% and has also plunged nearly 39% in the past six months.
- Samantha Subin, Sean Conlon
Copper was last down 6.3%, on pace for its worst day going back to April 4 when the commodity fell 8.83%. The metal hit a fresh low of 4.5240, its lowest level since April 14th when copper traded as low as 4.