U.S. stock futures fell further Wednesday as an economic data barrage pointed to a slowing economy, while investors also waded through a deluge of corporate earnings.
At 08:50 ET (12:50 GMT), Dow Jones Futures dropped 370 points, or 0.9%, S&P 500 Futures fell 78 points, or 1.4%, and Nasdaq 100 Futures slipped 366 points, or 1.9%.
The main stock indices closed higher Tuesday, with the Dow Jones Industrial Average gaining 0.8%, and both the S&P 500 index and the NASDAQ Composite adding 0.6%.
It has been a turbulent month on Wall Street, with the major averages gradually narrowing the month’s losses after the announcement of U.S. tariffs at the start prompted heavy selling. The S&P 500 briefly entered a bear market early in April, but is now down just 0.9% this month. The DJIA is on pace for a 3.5% loss in April, while the Nasdaq is about 0.9% higher.
U.S. economy contracted in Q1
That said, the latest economic data have pointed to the uncertainty surrounding the Trump administration’s trade polices have already damaged the largest economy in the world.
The U.S. economy unexpectedly contracted in the first quarter, data released earlier Wednesday showed, as U.S. gross domestic product contracted by 0.3% on an annualized basis during the January to March period. In the fourth quarter, it had grown by 2.4%. Economists had predicted slight expansion of 0.2%.
Additionally, U.S. private employers added far fewer jobs than anticipated in April, as private payrolls rose by 62,000 this month, slipping from a downwardly-revised 147,000 in March, the ADP National Employment Report showed on Wednesday.
Earlier this week, the consumer confidence index dropped to its lowest reading since May 2020, data showed on Tuesday, while JOLTS job openings for March fell to 7.192 million from 7.48 million.
These data points suggest that Trump’s tariffs are denting the wider economy -- an outcome that has been predicted by many economists.
Easing trade tensions help tone
Sentiment had been improving on the hope that the worst of the tariffs announcements may be behind the market, helped by U.S. President Donald Trump signing two orders before the closing bell on Tuesday to ease the impact of auto tariffs, offering tax credits and tariff relief on materials.
The decision came as Trump visited Michigan, a major auto manufacturing hub, just before 25% tariffs on auto parts were set to begin.
In another positive note, Commerce Secretary Howard Lutnick told CNBC that the U.S. was close to announcing a major trade deal.
Microsoft, Meta results in focus
This busy earnings week, with about one-third of S&P 500-listed firms slated to post results, continues, with the focus mostly on numbers from software giant Microsoft (NASDAQ:MSFT) and Facebook-owner Meta Platforms (NASDAQ:META) after the close Wednesday.
The companies are part of a slew of "Magnificent Seven" mega-cap tech players set to report this week, with iPhone-maker Apple (NASDAQ:AAPL) and e-commerce titan Amazon (NASDAQ:AMZN) scheduled to unveil earnings after the bell on Thursday. These groups have led markets higher in recent years, but have largely underperformed so far this year.
Elsewhere on Wednesday, Starbucks (NASDAQ:SBUX)stock fell sharply after the coffee chain’s global comparable sales declined for the fifth straight quarter, with its turnaround strategy struggling to bear fruit.
Industrial giant Caterpillar (NYSE:CAT) reported a lower first-quarter profit, hurt by softer demand due to economic uncertainty.
Norwegian Cruise Line (NYSE:NCLH) stock fell sharply after the cruise operator reported disappointing first-quarter earnings, and lowered its full-year adjusted net income guidance, citing softening demand.
Super Micro Computer (NASDAQ:SMCI) stock slumped after the AI server maker cut its third-quarter revenue and profit expectations due to delays in customer spending, amplifying worries of a pullback in AI-linked investments.
Snap (NYSE:SNAP) stock fell 14% after the Snapchat parent reported better-than-expected first-quarter revenue but declined to provide guidance, citing macroeconomic uncertainties that could weigh on advertising demand.
Crude set for monthly drop
Oil prices fell Wednesday, on course for their largest monthly drop in more than three years as the global trade war hit demand growth forecasts.
Both contracts have lost over 15% so far this month, the biggest percentage drop since November 2021.
Worries about demand amid the trade war have weighed on investor sentiment, while weak Chinese manufacturing activity data, released earlier Wednesday, has also played into this narrative.