Stocks make comeback, close in the green after early losses

Stocks bounced back from early losses today as investors seemed unfazed by the new government data revealing a contraction in the U.S. economy during the first quarter of the year. The S&P 500 saw an increase of 8 points, or 0.2%, closing at 5,569 points, while the Dow Jones Industrial Average rose by 142 points, or 0.4%, to close at 40,669. On the other hand, the Nasdaq Composite experienced a slight dip of 15 points, or 0.1%.

Initially, stocks plummeted in early trading following the Commerce Department’s announcement of a 0.3% decline in the GDP for the first quarter, compared to a 2.4% growth in the final quarter of 2024. Carl Weinberg, chief economist at High Frequency Economics, expressed concerns about the negative GDP headline impacting company profits. The actual GDP figure was lower than the 0.8% growth predicted by economists surveyed by FactSet, marking the lowest GDP reading since the first quarter of 2022.

Despite the disappointing GDP report, economists cautioned that it may not fully reflect the state of economic growth. They attributed part of the decline to a surge in imports as businesses rushed to beat impending tariffs. Bret Kenwell, an investment analyst at eToro, highlighted the potential for significant revisions to the GDP rate due to the Trump administration’s inconsistent trade policies with Canada and Mexico.

Later in the day, a report indicated that the preferred inflation measure of the Federal Reserve had slowed to 2.3% in March, offering some relief to investors. The market has been experiencing volatility in recent weeks, driven by concerns over the economic impact of President Trump’s policies.

President Trump himself took to Truth Social to deflect blame for the stock market performance onto President Biden, promising an economic boom due to upcoming tariffs. Investors are eagerly awaiting the Labor Department’s release of April job growth data on Friday, with expectations of 135,000 new jobs added compared to March’s figure of 228,000.

While corporate profits remain steady, there are concerns about the repercussions of escalating economic uncertainty on consumer spending and business investment. Equity analyst Adam Crisafulli of Vital Knowledge warned investors of the lingering risks associated with tariffs and the potential fallout from Trump’s trade war that has yet to fully materialize.

In conclusion, the market remains cautiously optimistic despite the recent economic setbacks, with investors closely monitoring upcoming economic indicators and geopolitical developments for future market direction.

This article was contributed by The Associated Press.