The U.S. economy contracted in the first quarter, amplifying investors’ recession fears. The Commerce Department reported that GDP decreased by 0.7%, a reversal from a 2.4% increase in the fourth quarter.
#NewsFatafat | Wall Street ends the week strong! S&P 500 marks longest winning streak in 20 years, fueled by upbeat April payrolls report. 📈🇺🇸 #StockMarket #SP500 #WallStreet #JobsReport pic.twitter.com/qWpPh3419C
— ET NOW (@ETNOWlive) May 3, 2025
The decline was influenced by a 41% import surge in the previous quarter as companies sought to stay ahead of President Donald Trump’s tariffs.
Consumer spending also slowed significantly, and government expenditures were reduced. Despite this negative data, the stock market posted narrow gains on Wednesday after a bout of volatile trading.
“This is Biden’s stock market, not Trump’s”- Wall Street Starts May Strong Despite Economic Concerns, Trump Blames Biden for Market Woes#Trump #USEconomy #WallStreet
🖋️ @AsmiParekh https://t.co/vMwssLmIVr— ET NOW (@ETNOWlive) May 2, 2025
The S&P 500 advanced 0.15% to close at 5,569.06, while the Dow Jones Industrial Average added 141.74 points, or 0.35%, settling at 40,669.36.
The Nasdaq fell 0.09% to end at 17,446.34.
The S&P 500 has recovered all of its post-'Liberation Day' losses.
It ended up 2.92% this week and 7.65% over the last two weeks, the largest two-week gain since October 2022. pic.twitter.com/suAggnfeoH
— Nick Timiraos (@NickTimiraos) May 2, 2025
The session was rocky, with the S&P 500 down nearly 2.3% and the Dow sliding more than 780 points at their lows. However, investors managed to look past the negative data and entered a buying mood late on Wednesday, allowing a stock rebound to conclude the month.
The S&P 500 ended April with a roughly 0.8% loss, while the Dow experienced a 3.2% decline. It marked the third straight losing month for both indexes, though the Nasdaq posted a nearly 0.9% gain.
Economic downturn meets Dow surge
Jed Ellerbroek of Argent Capital Management emphasized that the artificial intelligence (AI) trade remains strong despite President Trump’s tariffs and global trade tensions. He highlighted the continual progress and impact of AI tools and capabilities. The AI advancements continue to rise in importance and impact,” Ellerbroek stated, acknowledging ongoing uncertainty around tariffs and global trade dynamics, which could persist for years.
During a cabinet meeting on Wednesday, President Trump offered no indication of improved U.S.-China relations. He continued criticizing China’s trade policies, calling the country the “leading candidate for the ‘chief-ripper-offer'” of the U.S. Trump deflected the negative GDP report onto his predecessor. Consumer staples and health care sectors were the only S&P 500 segments in positive territory on Wednesday, with defensive positioning from investors amid recession fears.
Consumer staples stocks rose by 0.3%, and health care stocks increased by 0.2%. Energy stocks experienced their worst April on record, with the sector plunging around 14.5% since the beginning of the month. Major contributors to the decline included significant losses from leading energy companies, with every stock in the sector ending the month in the red.
Among April’s top performers were Palantir and Netflix, with stocks up over 36% and 20%, respectively, positioning them among the strongest gainers this month. Despite recent market turbulence and economic data pointing to potential recessionary impacts, specific sectors and stocks demonstrated resilience. Investors and analysts continue to monitor policy changes, trade dynamics, and technological advancements, which will influence future market directions.
