Stock Market News: Dow Falls After Weak Economic Data
The stock market’s winning streak was in jeopardy following a wave of weak economic data on Wednesday.
The Dow Jones Industrial Average was down 662 points, or 1.6%, shortly after the market opened. The S&P 500 was down 2.1%. The Nasdaq Composite was down 2.7%. The S&P 500 and Dow have each risen six days in a row.
The yield on the 10-year Treasury note rose to 4.18%.
First, ADP said private businesses in the U.S. added 62,000 jobs in April, which was well below expectations at 134,000.
“The labor market may not be collapsing, but it sure is cooling off,” writes Rosenberg Research’s David Rosenberg.
Stocks fell on that news, but turned even lower after first-quarter GDP fell more than expected while quarterly inflation rose more than expected. The data reflected efforts by businesses and consumers to get ahead of President Donald Trump’s tariff plans.
“So much of the influences in this data could have been from altering the timing of decision making because of the tariffs in terms of spend on equipment, trade, inventories and consumer spending,” writes Peter Boockvar, an independent economist and market strategist. “The economic result will most likely be a stagflationary combination of higher prices…and punk growth.”
If that wasn’t enough data for Wall Street to digest, traders will also get an update on March personal consumption expenditures inflation at 10 a.m. ET.
“Even if today’s weak GDP may have partially reflected companies trying to get ahead of tariffs, it was still a stagflation warning shot over the bow of the economy,” writes Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. “This type of data won’t soothe the markets, and it won’t make the Fed’s job any easier.”
“This is Biden’s Stock Market, not Trump’s,” Trump posted. “I didn’t take over until January 20th.”
He added, “This will take a while, has NOTHING TO DO WITH TARIFFS, only that left us with bad numbers, but when the boom begins, it will be like no other. BE PATIENT !!!!”
Sentiment among consumers and businesses has fallen sharply in recent months as the Trump administration rolled out its tariff plans.
“If you were looking for a playbook on how to slow a healthy economy, this seems like a good example,” writes Scott Helfstein, head of investment strategy at Global X. “The continual sequence of policy reversals has led to very high levels of uncertainty for businesses and investors.”