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Stock market today: Dow, S&P 500, Nasdaq fall on bleak GDP, jobs data with Big Tech earnings on deck
- Yahoo Finance’s Brian Sozzi reports:
- Read more here.
- Stocks are modestly lower after data released this morning showed the US economy contracted for the first time in three years as goods imports jumped ahead of Trump administration tariffs.
- Some economists are looking past the GPD print, wondering more about what will happen in the second half of the year if tariffs are held in place or deals with trading partners lag.
- “We are not overly concerned about the negative GDP print. After all, the economy expanded 2.5% in 2022 as a whole despite the decline in 1Q22,” said Brian Rose, Senior US Economist, UBS Global Wealth Management on Wednesday
- “What is more concerning is the potential impact of tariffs, which is likely to cause a more substantial economic slowdown in the second half of 2025.”
- President Trump blamed former President Joe Biden for the disappointing GDP print.
- “I have to start off by saying, that’s Biden. That’s not Trump,” Trump said on Wednesday during a Cabinet meeting. “We took over his mess.”
- In a social media post earlier on Wednesday Trump said the GDP contraction has “NOTHING TO DO WITH TARIFFS” and to “BE PATIENT!!!”
- Crude oil prices are headed for their worst monthly drop since 2021 as fears over a global economic downturn and demand shock as a result of tariffs come as the supply of oil is about to surge.
- West Texas Intermediate (CL=F) crude, the US benchmark, was down over 3.5% on Wednesday to trade as low as $58.20 a barrel, while Brent (BZ=F), the international benchmark, also sank to as low as $60.93 a barrel after a report indicated Saudi Arabia, a major producer, is willing to deal with a prolonged period of lower oil prices.
- WTI futures have lost over 16% this month, while Brent crude has dropped closer to 17%, the largest monthly decline since November 2021.
- Read more here.
- President Trump blamed former President Joe Biden for data released this morning showing a contraction in first quarter GDP.
- “I have to start off by saying, that’s Biden. That’s not Trump,” Trump said on Wednesday during a Cabinet meeting. “We took over his mess.”
- Trump touted domestic investments coming into the country to create factories.
- Commerce Secretary Howard Lutnick praised President Trump when describing a TSMC chip-making facility being developed in Arizona that will require 4,000 employees.
- “This is all driven by your tariff policies,” said Lutnick. “No chance this would be happening without it.”
- Earlier this morning, President Trump went on social media to blame Biden for a negative market reaction to tariffs.
- “This is Biden’s Stock Market, not Trump’s,” wrote Trump after the GDP data was released. “I didn’t take over until January 20th. Tariffs will soon start kicking in, and companies are starting to move into the USA in record numbers. Our Country will boom, but we have to get rid of the Biden “Overhang.””
- Read more here.
- Stocks came off session lows on Wednesday as investors digested a wave of economic data, including the first contraction of the US economy in three years.
- In mid-morning trade, the benchmark S&P 500 (^GSPC) dropped around 0.9%, while the tech-heavy Nasdaq Composite (^IXIC) sank 1.3%. The Dow Jones Industrial Average (^DJI) pulled back about 0.6%.
- Earlier in the trading day, all three major indexes had fallen around 2%.
- Consumer Staples (XLP) and Health Care (XLV) led the market action while Energy (XLE) was the biggest laggard of the day, down over 3%.
- Yahoo Finance’s Claire Boston reports:
- Read more here.
- Starbucks stock fell 7.8% early Wednesday after the coffee giant’s second quarter earnings report disappointed Wall Street and cast a shadow over its CEO’s plan to turn around the company.
- US comparable store sales — a closely watched metric that includes results from stores open for more than a year — fell for the fifth consecutive quarter, sinking 2% as consumers sought cheaper alternatives at rivals such as Dunkin’ and McDonald’s (MCD). Wall Street analysts had expected a more modest 0.3% decline in the results on Tuesday.
- Starbucks’ slumping store sales are a result of fewer customers visiting its stores to buy drinks, though those who still frequent its shops are spending more money. Transactions fell 4% from the prior year, while the average ticket size, or dollar amount spent in each transaction, rose 3% in the US.
- Other key stats disappointed too. The coffee chain reported adjusted earnings per share of $0.41 for the quarter ending March 30, less than the $0.49 expected from Wall Street analysts, according to Bloomberg data. Its revenue of $8.76 billion fell short of the projected $8.83 billion.
- Read the full story here.
- The latest reading of the Fed’s preferred inflation gauge showed inflation eased in March as investors brace for an uptick in pricing pressures following the implementation of President Trump’s tariff agenda.
- The core Personal Consumption Expenditures (PCE) index, which strips out the cost of food and energy and is closely watched by the Federal Reserve, came in flat over the prior month, above expectations of a 0.1% increase and slower than the revised 0.5% increase seen in February.
- Core PCE was up 2.6% over the prior year in March, in line with estimates and also ahead of February’s upwardly revised 3% increase.
- In the all-items measure, the price index came in flat month over month and rose 2.3% from a year ago, both roughly in line with forecasts. February’s yearly price index reading was revised up to 2.7% from the prior 2.5%.
- At the same time inflation in the first quarter clocked in hotter than expected, according to an earlier Bureau of Economic Analysis (BEA) report. The “core” Personal Consumption Expenditures index, which excludes the volatile food and energy categories, grew by 3.5% in the first quarter, above estimates for 3.2% and above the 2.6% seen in the prior quarter.
- Separately, the BEA said consumer spending accelerated 0.7% for the month, above the 0.6% forecast. That came as personal income posted a 0.5% rise, against the estimate for 0.4%.
- Nvidia (NVDA) stock fell as much as 4.1% early Wednesday as news from Wall Street and Washington spurred fears of moderating AI demand and tightening chip trade rules from the Trump administration.
- Nvidia customer Super Micro Computer (SMCI), which makes servers using Nvidia’s designs to sell to data center operators and tech firms, cut its revenue and profit outlook for the third quarter — the latest news to signal a wider potential pullback in demand for AI infrastructure.
- Super Micro dropped roughly 18% on Wednesday morning.
- Another challenge for Nvidia stock, according to analysts, is further potential changes from the Trump administration to AI chip export rules. Reuters reported late Tuesday that Trump officials are working to change a Biden-era AI trade rule capping access to US AI chips, potentially making it stricter.
- Tech stocks were also under broad pressure amid a market sell-off spurred by negative news early Wednesday on US economic growth and the state of the labor market.
- Read the full story here.
- Norwegian Cruise Line Holdings (NCLH) stock fell on Wednesday after the company reported weaker-than-expected first quarter earnings and indicated a slowdown in demand.
- Shares were down over 9% on Wednesday morning.
- Cruise lines like Royal Caribbean Cruises (RCL) have been saying that demand and bookings are holding up well, even with concerns that people might start spending less on travel.
- But Norwegian’s earnings report tells a different story, pointing to a drop in bookings over the next year.
- The cruise operator reported adjusted earnings of $0.07 per share on revenue of $2.13 billion, falling short of Wall Street forecasts of $0.09 per share and $2.15 billion in revenue.
- For the second quarter, the company is expecting adjusted earnings of $0.51 per share, falling below expectations of $0.52 per share. It also forecast occupancy at 102.5% for the full year, missing estimates of 103.5%.
- Norwegian attributed the shift to recent booking patterns and a more challenging macroeconomic environment.
- “While we recognize there may be potential pressures on the top line, we believe these can be effectively offset by the continued execution of our cost savings initiatives,” CEO Harry Sommer said in a statement.
- An update on gross domestic product (GDP) showed a sharp drop in growth with the US economy contracting at an annual rate of 0.3% in the first quarter, according to an advanced estimate released by the US Bureau of Economic Analysis on Wednesday.
- It was the first negative reading in three years. Economists had expected a drop to 0.1% growth. In the fourth quarter of 2024, real GDP increased 2.4%.
- The decrease primarily reflected an increase in imports as Trump’s tariff push rattled confidence and businesses rushed to stockpile.
- Along with an uptick in imports, the BEA said a deceleration in consumer spending and a downtick in government spending also added pressure to the reading. Compared to the fourth quarter, these were partly offset by upturns in investment and exports.
- Pricing pressures also escalated.
- The personal consumption expenditures (PCE) price index increased 3.6%, compared to an increase of 2.4% in the prior quarter. Excluding food and energy prices, the PCE price index jumped 3.5%, an acceleration from the 2.6% increase in Q4.
- Read more here.
- ADP’s read on private payroll growth in April showed a pullback in hiring amid what the report called a “difficult” environment defined by an “unease” among businesses.
- The report showed private payrolls rose by 62,000 in April, fewer than forecast by economists.
- Stock futures fell following the report, with Nasdaq futures off more than 1% to lead losses.
- “Unease is the word of the day. Employers are trying to reconcile policy and consumer uncertainty with a run of mostly positive economic data,” said Nela Richardson, chief economist at ADP. “It can be difficult to make hiring decisions in such an environment.”
- Humana stock (HUM) jumped 5% premarket after the health insurer reported mixed first quarter results and reaffirmed its full-year guidance.
- Investors were watching Humana after UnitedHealth Group (UNH) reported higher-than-expected medical costs in its Medicare Advantage business, which caused the stock to crash on April 17.
- Humana noted in its earnings that its Medicare Advantage costs were in line with expectations and that the government-funded private health insurance business was “performing as expected.”
- The company beat on adjusted earnings per share of $11.58, compared to Wall Street’s estimates of $10.09. Revenue came in at a slight miss of $32.11 billion, just under the consensus of $32.15 billion.
- Read more here.
- Caterpillar (CAT) reported first quarter earnings that missed Wall Street’s expectations Wednesday, as sales fell across all its segments and demand for construction equipment weakened in the quarter.
- The industrial company also laid out two different scenarios for its annual forecast, one accounting for a tariff impact and one excluding that impact.
- The forecast that excluded tariffs showed an improvement from its previous outlook, which sent the stock more than 3% in premarket trading.
- As for the tariff impact, Caterpillar said it expects $250 million and $350 million in additional tariff-related costs in its second quarter.
- As Yahoo Finance’s Dani Romero reported yesterday, construction job openings fell in March as developers hesitated to move forward with new projects since President Trump’s across-the-board tariff announcements. Overall, Caterpillar stock has had a tough year so far and is down 15% year to date.
- Read more here.
- Earnings: Microsoft (MSFT), Meta (META), ADP (ADP), Albermarle (ALB), Caterpillar (CAT), Generac (GNRC), GE HealthCare (GEHC), Humana (HUM), Hess (HES), Qualcomm (QCOM), Robinhood (HOOD)
- Economic data: MBA Mortgage Applications (week ending April 25); ADP employment change (April); GDP annualized (first quarter advance estimate); Personal consumption (first quarter advance estimate); Employment cost index (first quarter); Personal spending (March); Personal income (March) MNI Chicago PMI (April); PCE price index; Pending home sales (March)
- Here are some of the biggest stories you may have missed overnight and early this morning:
- M&A accelerates worldwide, but not in US in new Trump era
- China creates list of US goods spared from 125% tariffs
- The US economy may have avoided a recession so far. Here’s how that could change.
- Starbucks slides as sales slump, CEO points to turnaround plan
- House Republicans plan to defund the CFPB
- Super Micro stock sinks as AI server maker slashes profit forecast
- Stellantis suspends guidance, to reassess capex due to US tariffs
- Corporate earnings paint 2 different pictures of the US consumer
- Trump officials eye changes to Biden’s AI chip export rule
- Old wisdom of ‘sell in May’ back in focus as stock market churns
- Super Micro Computer’s (SMCI) cuts to revenue and profit expectations are rattling nerves about prospects for AI-linked spending ahead of Big Tech’s moment of earnings truth.
- The AI server maker’s customers have unexpectedly pushed back procurement decisions from the third quarter to the fourth, prompting the company to slash its sales guidance to $4.5 billion to $4.6 billion, down from the prior $5 billion to $6 billion.
- Shares in Super Micro tumbled almost 16% in premarket trading after the disappointing preliminary results.
- The AI jitters spread to chipmakers Nvidia (NVDA) and AMD (AMD), which saw their stock slip about 2% and 1%, respectively. Meanwhile, shares in server rivals Dell (DELL) and HPE (HPE) also retreated.
- Reuters reports:
- Read more here.
- Oil prices are on track to post their worst monthly performance for April, as mounting concerns over a slowing global economy—fueled by the ongoing U.S.-led trade tensions—dampen outlook for energy demand.
- Bloomberg reports:
- Read more here.
