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On Wednesday, stocks on Wall Street experienced a downturn, following disappointing growth data from the US and a wave of underwhelming corporate earnings reports.
The leading S&P 500 index dropped over 2 percent during early trading in New York, putting an end to a six-day winning streak, but later improved to close down 1.1 percent for the day.
Starbucks shares plummeted by 7.2 percent after the coffee giant announced on Tuesday that its quarterly net income had halved compared to the previous year. Meanwhile, Super Micro Computer, which supplies chipmaker Nvidia, fell 17 percent as it projected revenue and earnings per share much lower than what analysts had anticipated.
Nvidia saw a 2.7 percent decline, and Tesla dropped 5.2 percent, which contributed to a 1.5 percent decrease in the tech-heavy Nasdaq Composite index.
This market activity followed data revealing that the US economy shrank for the first time since 2022, contracting by an annualized 0.3 percent in the first quarter as companies hurried to purchase imported goods in light of Donald Trump’s steep tariffs on several nations.
Additionally, inflation data came in slightly higher than expected. The Personal Consumption Expenditures index, which is the Federal Reserve’s preferred measure of inflation, rose by 2.3 percent year over year in March.
“Inflation is also higher, which adds to the stagflation concerns and limits the Federal Reserve’s ability to intervene as economic sentiment declines,” stated James Knightley, chief international economist at ING.
Consumer and business confidence in the US has significantly dropped following Trump’s aggressive tariff announcements, despite the stock market showing signs of recovery in recent weeks after most tariffs were postponed for 90 days.
“The economy was essentially stagnant in the first quarter of the year, while both headline and core inflation saw an uptick,” remarked Ryan Sweet, chief US economist at Oxford Economics.
Worries regarding the state of the largest economy in the world have negatively impacted commodity markets, with Brent crude, the global oil benchmark, falling by 1.2 percent to $63.50 per barrel.
In contrast, European markets showed gains, with the region-wide Stoxx Europe 600 rising by 0.4 percent and Germany’s Dax increasing by 0.3 percent.
