U.S. stocks traded lower Wednesday, but were off early dips, as trade war resolutions remained elusive and the economy began to show signs of strain.
The blue-chip Dow fell 0.6%, giving up 239 points to trade near 40,289 at midday, while the broad S&P 500 was 0.9% lower, losing 52 points to about 5,509. The tech-heavy Nasdaq fell 1.4%, down 242 points near 17,220.
Stocks turned lower before the bell, following a Commerce Department report Wednesday morning that showed gross domestic product, a measure of economic growth, shrank in the first three months of the year as imports surged ahead of expected tariffs. It was the first contraction in three years.
The 10-year U.S. Treasury note was unchanged at 4.17%. The VIX, which is also known as Wall Street’s “fear gauge,” was 5%, after spiking as much as 15% in the morning.
Major indexes had risen Tuesday on hopes for trade deals and a rollback of President Donald Trump’s aggressive tariff plan. “There are multiple, multiple deals that are extraordinarily close,” he said in a CNN interview Tuesday, “especially with our Asian trading partners.” He didn’t say which countries the deals covered.
Economic news
In addition to the GDP report, private-sector hiring was lower than expected in April, according to payroll provider ADP, coming in at 62,000 jobs compared to forecasts for double that. “Unease is the word of the day,” said Dr. Nela Richardson, chief economist for the company, in a release. “It can be difficult to make hiring decisions in such an environment.”
The PCE inflation read, which is the gauge favored by the Federal Reserve, showed price gains cooling in March. Most economists expect higher inflation to result from tariffs, which would show up in later reports.
Corporate news
Earnings reports before the opening bell were mixed.
Shares of Caterpillar Inc. were higher despite an earnings miss. The company reported lower sales and profits for the quarter compared to a year ago. But shares of Trane Technologies surged more than 6% in early trade after reporting higher revenues and earnings. Shares of eyecare company Bausch + Lomb slid 15% after missing on earnings and revenue. Wingstop Inc. stock was more than 10% higher midday after an earnings beat.
Investors are also awaiting a slew of earnings reports from Big Tech after the closing bell, including Microsoft and Meta, the parent company of Facebook.
Some large companies that reported Tuesday night were under pressure Wednesday:
-
Starbucks said earnings and sales in its second fiscal quarter and same-store sales fell for a fifth straight quarter. Shares were 7% lower in midmorning trade.
-
First Solar’s results missed analysts’ estimates in the first three months of the year. The company also cut its full-year earnings guidance. The stock fell nearly 9%.
-
Super Micro warned its fiscal third quarter results would miss analysts’ expectations as customers delayed platform decisions. The stock was trading about 15% lower midday, off earlier lows.
-
Snap reported better-than-expected results for the first three months of the year but declined to give guidance due to economic uncertainty. It also said some advertisers have reported an impact from changes to the de minimis exemption that is scheduled to end May 2. Shares fell about 15%.
This article originally appeared on USA TODAY: Stocks lower amid economic contraction after GDP shrank in Q1
