Midday Market Update: Stocks Retreat as GDP Contracts, Big Tech Earnings Loom

Market Indexes Pull Back on Disappointing Economic Data

As of midday Wednesday, April 30, 2025, major U.S. stock indexes are trading lower following the release of concerning economic data. The S&P 500 is down 0.51%, while the tech-heavy Nasdaq Composite has fallen 0.66%. The Dow Jones Industrial Average is showing relative strength but still down 0.75% after gaining in six consecutive sessions previously.

This morning’s GDP report showed the U.S. economy contracted in the first quarter of 2025, marking the first economic decline in three years. Economists had expected modest growth of 0.4%, but rising trade tensions and uncertainty surrounding President Trump’s tariff policies have weighed heavily on business activity.

Inflation Cools as Consumer Spending Surges

The Personal Consumption Expenditures (PCE) price index—the Federal Reserve’s preferred inflation gauge—rose just 2.3% in March from a year earlier, down from February’s 2.7% increase. On a monthly basis, prices remained unchanged, compared to 0.4% in February.

Core PCE, which excludes volatile food and energy prices, was flat for the month and slowed to an annual rate of 2.6% from 3%. The cooling inflation data brings the Fed closer to its 2% target, potentially supporting the case for interest rate cuts later this year.

Meanwhile, consumer spending jumped 0.7% in March, the largest monthly increase in over two years, as Americans rushed to make purchases ahead of Trump’s tariff implementation.

Big Tech Earnings in Focus

Investors are anxiously awaiting earnings reports from two tech giants after today’s market close. Meta Platforms (META) and Microsoft (MSFT) will release their quarterly results, with analysts closely monitoring their performance and guidance amid ongoing economic uncertainty.

Meta is expected to report earnings per share of $5.25 on revenue of $41.3 billion. The social media giant faces challenges from its exposure to advertising and Chinese-based advertisers, who have reportedly pulled back on ad spending due to trade tensions.

Microsoft’s report will be scrutinized for insights into cloud growth and AI services demand. Analysts anticipate solid cloud performance driven by strong bookings and AI adoption.

Key Stocks Making Moves

Several stocks are making significant moves today:

– Hims & Hers Health (HIMS) has surged 23.03%, making it one of the day’s top gainers.
– Starbucks (SBUX) is up 1.13% despite missing earnings and revenue estimates in its report yesterday, with same-store sales declining for the fifth consecutive quarter.
– Brinker International (EAT) has plummeted 14.80%, leading the day’s losers.
– Nvidia (NVDA) is holding relatively steady with a modest gain of 0.27%.

Trade Tensions and Tariff Negotiations

Markets received a boost yesterday after Commerce Secretary Howard Lutnick hinted at an upcoming trade deal announcement. President Trump later confirmed that tariff negotiations with India are “coming along great,” raising hopes for an imminent agreement.

April has been a volatile month for markets following Trump’s “reciprocal” tariff announcement on April 2. The S&P 500 briefly entered bear market territory on April 7 but has since recovered much of those losses and is now down just 0.9% for the month.

Looking Ahead

Market participants are bracing for more volatility as earnings season continues. Amazon (AMZN) and Apple (AAPL) are scheduled to report their results tomorrow, completing a busy week for Magnificent Seven stocks.

Investors will be particularly focused on forward guidance, though many companies have pulled their outlooks due to tariff-related uncertainty. Without clear guidance, valuing stocks becomes increasingly challenging, potentially limiting immediate upside.

As we move into May, markets will continue to monitor trade developments, economic indicators, and the Federal Reserve’s response to the evolving economic landscape.