The U.S. economy contracted in the first quarter of 2025, marking the first decline since 2022.
The Commerce Department reported that gross domestic product fell 0.8%, a significant reversal from the 2.4% increase in the previous quarter. A 41% import surge influenced the drop as companies tried to avoid new tariffs.
Consumer spending also slowed, and government expenditures declined. President Donald Trump blamed the weak GDP on his predecessor Joe Biden’s policies. He urged patience, stating that the continual policy reversals have increased uncertainty for businesses and investors.
Despite the grim economic data, the stock market managed to turn around late Wednesday.
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The Dow Jones Industrial Average rose by over 100 points, while the S&P 500 booked its third consecutive losing month. The artificial intelligence sector remained resilient despite tariff concerns.
Microsoft CEO Satya Nadella reported significant progress, with much of the company’s code now being generated by AI.
Some stocks saw notable movements midday.
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Dow climbs amid economic uncertainty
Etsy shares tumbled 9% following a cautious outlook amid tariff uncertainty. Seagate’s stock surged almost 9% after posting strong earnings and offering optimistic guidance. Snap shares dropped nearly 15% despite reporting better-than-expected revenue for the first quarter.
Energy stocks faced their worst April on record, tumbling around 14.5% this month. Consumer staples and health care were the only S&P 500 sectors trading in positive territory. Palantir Technologies surged over 36%, on track for its best month since November 2024.
Netflix increased by over 20%, heading for its best month since June 2024. The U.S. stock market remained a focal point of uncertainty amid evolving economic and trade conditions. Investors are assessing whether the US will enter a recession soon.
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