The economic slowdown is now a reality after the U.S. economy shrunk by 0.3% during Q1 2025. After months of recession talk, the economy is now closer than before to falling into one with businesses racing to secure imports ahead of the tariff effect. In Q1, U.S. GDP declined at an annual rate of 0.3%, adjusted for inflation, the steepest decline it has experienced since 2022 when the pandemic was in full force. Results even took economists by surprise, who forecast an economic expansion of 0.4% in Q1, completely underestimating the tariff impact. The S&P 500 index is still up by 2% over the past five day but is down 6.7% year-to-date.
The recession fears sent the stock market spiraling, breaking the S&P 500’s six-day winning streak and triggering a 600-point drop in the Dow Jones Industrial Average at its worst levels of the session. All sectors of the economy are seeing red, the worst of which is being felt in consumer discretionary stocks, down 3%, followed by energy with a 2.6% drop.
Magnificent Seven stocks are down as the risk-off appetite digs in, including a steep 6% drop in Tesla (Nasdaq: TSLA) and drops of nearly 4% for Nvidia (Nasdaq: NVDA) and Amazon (Nasdaq: AMZN). Meta Platforms (Nasdaq: META) has perhaps chosen the worst day of earnings season to be publishing results after the closing bell today.
Here’s a look at the performance as of morning trading:
Dow Jones Industrial Average: Down 558.31 (-1.4%)
Nasdaq Composite: Down 355.73 (-2.04%)
S&P 500: Down 90.01 (-1.6%)
Market Movers
Seagate Technology (Nasdaq: STX) is gaining 9.1% today, clearly bucking the otherwise downward trend on a stronger-than-expected fiscal Q3 earnings report.
Trane Technologies (NYSE: TT) is up 7% on the day after beating Q1 consensus estimates on both the top and bottom lines.
First Solar (Nasdaq: FSLR) is shaving off 10% of its value today on an earnings miss and indication that that tariffs will impact 2025 revenue.
Starbucks (Nasdaq: SBUX) is down 8%. Adding insult to injury, Goldman Sachs downgraded SBUX to a “neutral” rating from “‘buy” with a $85 price target attached, down from a previous expectation of over $100 per share after the coffee retailer’s Q1 results disappointed.
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