US stocks fell on Wednesday but came off their lows of the session as investors digested a deluge of economic data, led by the first contraction of the US economy in three years , and waited for a parade of Big Tech earnings to begin.
The benchmark S&P 500 ( ^GSPC ) dropped around 0.9%, while the tech-heavy Nasdaq Composite ( ^IXIC ) sank 1.4%. The Dow Jones Industrial Average ( ^DJI ) pulled back about 0.6% after the blue-chip index notched its longest win streak of 2025.
Markets are getting set to wrap up a tumultuous April that saw stocks whipsawed by President Trump's tariff hikes and burgeoning trade war with China. The Dow ( ^DJI ) is on track for a monthly drop of just over 3%, alongside much smaller moves for the other major gauges.
An update on gross domestic product (GDP) showed a sharp drop in growth. The US economy contracted 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.
The decrease primarily reflected an increase in imports as Trump's tariff push rattled confidence and businesses rushed to stockpile. Economists had expected a drop in growth of 0.1%. In the fourth quarter of 2024, real GDP increased 2.4%.
Prior to the GDP release, an ADP 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.
On the inflation front, the March reading of the Federal Reserve's preferred inflation gaug e showed prices eased last month as investors brace for an uptick in pricing pressures following the implementation of President Trump's tariff agenda.
At the same time, inflation in the first quarter clocked in hotter than expected, complicating the path forward for the Federal Reserve. 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.
Meanwhile, tech giants are the highlights in Wednesday's flood of earnings reports. Microsoft ( MSFT ) is set to report its earnings after the bell, with pressure mounting for an AI payoff. Meta's ( META ) quarterly report is also due after the market close , with the focus on how tariffs could impact its business.
Lately, Wall Street has found new reason to believe that Trump's upbeat stance on tariff negotiations will result in the duties ultimately being dialed down.
Read more: The latest on Trump's tariffs
Trump said on Tuesday that he believed China would "eat" the cost of his tariffs, which would limit the impact on US consumers. For its part, Beijing is quietly creating a list of US-made products to be exempt from its 125% tariffs, sources told Reuters .
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