U.S. GDP Shrank In Frist Quarter as Businesses Front Load Ahead of Import Taxes

Barry Adams
30 Apr, 2025
New York City

Wall Street lacked direction in early trading as investors reviewed the fresh batch of quarterly earnings and economic data. 

The S&P 500 index decreased 0.1%, and the Nasdaq Composite declined 0.2%, and investors reviewed the latest updates on GDP growth and a measure of inflation. 

On the final trading day of April, the most volatile month on record, investors remained nervous about the constantly changing trade policy of the Trump administration. 

Markets plunged on April 2nd after Donald Trump announced country-specific tariffs and later revised tariffs on several key trading partners, adding to market turmoil. 

The Trump administration's constant flip-flop about the scope of tariffs and lack of details and specific timetable unnerved global investors. 

The market went into near panic mode after Donald Trump ramped up his unprofessional attacks on the autonomy of the Federal Reserve and its chief but changed his tone a few hours later following the sharp intraday market losses.

Despite the constant chaos of the Trump administration, market sentiment has recovered after Alphabet, General Electric, Goldman Sachs, Morgan Stanley, Citigroup, and JPMorgan Chase reported better-than-expected quarterly results. 

The S&P 500 index has rebounded  from the loss of 10% in early April to a decline of 0.9% before the start of trading on the final day of the month. 

 

U.S. Economy Shrank In First Quarter

On the economic front, the U.S. GDP contracted at a 0.3% annual pace in the first quarter, weighed down by the surge in imports ahead of the Trump tariff implementation. 

The U.S. economy sharply reversed its course from an annual pace of increase of 2.4% in the fourth quarter of 2024, after imports soared 41% as businesses stockpiled ahead in anticipation of higher costs. 

GDP growth turned negative for the first time since the first quarter of 2022, when the economy shrank 1.0%, according to data available from the U.S. Bureau of Economic Analysis. 

 

U.S. Private Payroll Growth Plunged In April 

U.S. private payrolls increased at a sharply slower pace in April, as businesses tackled high tariffs and uncertainty of the Trump administration weighed. 

The private sector added 62,000 net new jobs in April, sharply lower than the downwardly revised 147,000 in the previous month, according to the latest update released by ADP. 

 "Unease is the word of the day. Employers are trying to reconcile policy and consumer uncertainty with a run of mostly positive economic data," said ADP's chief economist, Dr. Nela Richardson.

April's nonfarm payroll data is scheduled to be released on Friday, and investors are bracing for a sharp fall in net new hiring across all employers. 

 

Commodities, Currencies, Indexes, Yields

The S&P 500 index decreased 1.9% to 5,456.19, the Nasdaq Composite edged down 2.4% to 17,047.39, and the Russell 2000 index was down 1.8% to 1,940.70.

The yield on 2-year Treasury notes edged lower to 3.64%, 10-year Treasury notes decreased to 4.17%, and 30-year Treasury bonds advanced to 4.66%.

WTI crude oil decreased $0.60 to $59.82 a barrel, and natural gas prices edged lower by $0.08 to $3.30 a thermal unit.

Gold decreased by $13.27 to 3,303.00 an ounce, and silver edged down by $0.32 to $32.61.

The dollar index, which weighs the US currency against a basket of foreign currencies, increased by 0.18 to 99.42, and it traded at the lowest level since April 2022.

 

U.S. Stock Movers 

Starbucks Corporation dropped 9.3% to $76.96 after the coffee chain reported results for the latest quarter. 

Yum Brands decreased 0.5% to $147.0, and the parent company of Pizza Hut reported mixed quarterly results. 

Etsy Inc. rose 1.4% to $46.70 after the online vintage products seller reported better-than-expected revenue in the latest quarter. 

Booking Holdings edged up 0.4% to $4,909.23, and the online travel agency reported strong results in the first quarter and estimated "stable growth" in the second quarter.

Snap Inc. plunged 14.2% to $7.80 after the social media platform operator reported a 14% jump in revenue in the first quarter but guided "headwinds" in the current quarter and pulled its outlook amid elevated uncertainty. 

First Solar Inc. plunged 12% to $120.90, and the solar technology company reported weaker-than-expected revenue in the first quarter.

The company estimated full-year earnings per share to range between $12.50 and $17.50, lower than the consensus of analyst estimates of $18.14 aggregated by LSEG.  

Super Micro Computer plunged 18.4% to $29.48 after the advanced computer server maker issued weaker-than-expected preliminary financial results for the fiscal third quarter.