Stocks sank sharply in morning trade after new government data showed the U.S. economy shrank in the first three months of the year.
The S&P 500 dropped 93 points, or 1.7%, to 5,468; the Dow Jones Industrial Average fell 604 points, or 1.5%; and the tech-heavy Nasdaq Composite shed 2.4%.
The Commerce Department said in a report on Wednesday that the nation’s gross domestic product — the total value of products and services — shrank at a 0.3% annual rate, down from growth of 2.4% in the final three months of 2024. The latest GDP readout was also lower than forecast of 0.8% growth from economists polled by FactSet.
“Equity traders will not be happy with the negative GDP headline,” Carl Weinberg, chief economist at High Frequency Economics, said in a research note. “Contracting GDP is not good for company profits, whatever the cause.”
Wall Street analysts have warned that the Trump administration’s trade, immigration and fiscal policies could dent U.S. economic growth, with some economists raising the odds of a recession.
Investors will get another important economic snapshot on Friday, when the Labor Department releases data on April job growth.
A report from ADP on Wednesday suggests hiring is slowing down, with private employers adding 62,000 jobs in April, less than half of the number of jobs added in March.
The Associated Press contributed to this report.
Mary CunninghamMary Cunningham is a reporter for CBS MoneyWatch. Before joining the business and finance vertical, she worked at “60 Minutes,” CBSNews.com and CBS News 24/7 as part of the CBS News Associate Program.
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