U.S. stocks slid Wednesday as investors digested a rare economic contraction and braced for a flood of Big Tech earnings. While indexes pared deeper losses from earlier in the day, market sentiment remained cautious amid recessionary fears, trade war tensions, and mixed corporate results.
The S&P 500 (GSPC) dropped 0.63%, the Nasdaq Composite (IXIC) fell 0.99%, and the Dow Jones Industrial Average (DJI) slipped 0.34% by mid-afternoon. The losses come as April draws to a volatile close, marked by President Trump’s aggressive tariff escalation and signs of economic softening.
Market Movers:
- Stellantis (STLA): Shares fell more than 4% after the automaker pulled its full-year guidance, citing “tariff-related uncertainties.” Revenue dropped 14% in Q1, and global shipments declined 9%—a sign that Trump’s trade war is already disrupting production pipelines.
- Starbucks (SBUX): The coffee giant’s stock plunged 7% after it reported its fifth consecutive quarterly decline in U.S. sales. A cooling consumer and persistent inflation weigh on foot traffic, especially in core domestic markets.
- West Texas Intermediate Crude (CL=F): Oil prices sank over 3.5% to below $59 per barrel as traders reacted to mounting fears of a global demand slowdown. WTI is on track for its steepest monthly drop since 2021, pressured by both recession worries and supply growth.
- Microsoft (MSFT): Shares traded flat ahead of its after-hours earnings report. Investors are watching closely for signs of monetization from AI investments, as expectations run high for the tech giant to deliver amidst a jittery macro backdrop.
- Meta (META): Also set to report after the bell, Meta faces pressure on two fronts: delivering robust ad revenue growth and managing tariff-related cost increases. Investors are eyeing how its sprawling global operations will fare under new trade restrictions.
Economic Data Paints a Bleak Picture
The U.S. economy contracted 0.3% in Q1, according to preliminary data from the Bureau of Economic Analysis — the first such decline since the pandemic-era drop in 2020. The sharp slowdown caught economists off guard, as consensus expectations had called for a modest 0.1% pullback. Surging imports largely drove the contraction, as companies rushed to get ahead of newly imposed tariffs.
Adding to the concern, April’s private payroll report from ADP showed weakening job growth, with hiring slowing across sectors. Businesses cited a tough operating environment and growing uncertainty around trade and inflation.
Inflation and Fed Outlook Remain Murky
Inflation added another layer of complexity for investors. The core PCE index — the Federal Reserve’s preferred inflation gauge — rose 3.5% in Q1, hotter than the expected 3.2%. While March data showed a modest cooling in monthly inflation, the quarterly jump raises concerns that tariffs may reignite price pressures just as the Fed was eyeing a potential rate cut path.
The Fed is now stuck between a rock and a hard place: economic growth is stalling, but inflation is proving sticky. Traders are trimming bets on a June rate cut, even as signs of a broader slowdown emerge.
Looking Ahead
All eyes now turn to after-hours earnings from Microsoft and Meta, which could determine the market's next move. With growth data disappointing and inflation refusing to fade, Big Tech's ability to deliver strong results may be the only force capable of steadying Wall Street’s nerves.
Beyond earnings, investors will closely monitor Friday’s official jobs report for further clues on labor market health. As April comes to a close, markets are navigating a toxic mix of policy uncertainty, economic fragility, and geopolitical tension — a combination that may continue to test the resilience of this year’s rally.
