US markets today: Wall Street stumbles as weak GDP reignites recession fears amid Trump’s tariff uncertainty

Wall Street closed lower on Wednesday as recession worries resurfaced following a surprise contraction in US GDP for the first quarter.

President Donald Trump’s renewed tariff threats and trade policy uncertainty further clouded the economic outlook, spoiling the equity market's impressive April rebound.

The S&P 500 fell 0.7%, the Nasdaq Composite dropped 1%, and the Dow Jones Industrial Average shed 159 points, or 0.4%, as investors digested the disappointing economic data.

A sharp pullback in consumer spending and rising geopolitical risks added to the cautious mood across markets.

US economy shrinks as consumer spending slows

According to the Commerce Department, gross domestic product (GDP) declined at an annualized rate of 0.3% in Q1 2025 — a stark reversal from the 2.4% expansion in the previous quarter.

While some analysts attributed the slump to a surge in imports late last year — a 41% spike as companies rushed to front-load goods before new tariffs — the overall report revealed deeper concerns.

Consumer spending, the backbone of the US economy, posted its slowest quarterly growth since 2023.

Government spending also declined, weighed down by fiscal tightening and Elon Musk’s recent DOGE budget cuts.

Still, March consumer expenditure surprised to the upside with a 0.7% monthly gain, ahead of economists’ forecasts of 0.5%, offering a faint glimmer of resilience.

April rebound stalls amid tariff turmoil

The disappointing GDP print interrupted a sharp rebound in US stocks this April.

The S&P 500, which had been down more than 11% earlier in the month following Trump’s April 2 tariff announcement, had nearly recovered most of its losses.

Hopes for a trade breakthrough had lifted sentiment, with Trump suggesting progress on negotiations with India, while Commerce Secretary Howard Lutnick hinted at a broader trade deal on the horizon.

But Wednesday’s data reignited fears that the economic damage may already be unfolding.

On Truth Social, Trump deflected blame onto what he called a lingering “Biden Overhang,” urging Americans to “BE PATIENT!!!” and asserting that his policies “will take a while” to deliver results.

Market movers: Solar and chip stocks hit hard

Solar technology giant First Solar saw its shares plunge 9% after CEO Mark Widmar warned that Trump’s tariffs would create a “significant economic headwind.”

The company slashed its full-year forecast accordingly. GE HealthCare also revised its guidance lower, citing similar tariff-related pressures.

In tech, Nvidia dipped over 1% following a nearly 14% drop in server maker Super Micro Computer, which issued weak preliminary Q3 results.

The sell-off extended to other AI-related stocks amid broader concerns over hardware demand.

Defensive sectors shine as recession fears grow

Amid the market sell-off, only two sectors in the S&P 500 managed to stay in the green: consumer staples and health care.

Investors rotated into defensive names, with staples up 0.3% and health care gaining 0.2%, reflecting caution about the macroeconomic environment.

With the US-China relationship still tense — Trump called China the “chief-ripper-offer” at a cabinet meeting — and recession risks building, Wall Street appears braced for more volatility in the coming weeks.