US markets Today: Dow slumps over 400 points, Nasdaq slides after data shows economy contracted last quarter

US markets opened in the red Wednesday morning, reacting to fresh economic data that showed the economy unexpectedly contracted in the first quarter of 2025. Investor sentiment soured sharply, sending major indexes tumbling.
As of 9:33 AM EDT, the Dow Jones Industrial Average (DJIA) dropped 422.94 points to 40,104.68, down 1.04per cent . The Nasdaq Composite slid 363.98 points to 17,097.34, a drop of 2.08per cent , while the S&P 500 fell 82.88 points to 5,477.95, down 1.49per cent.
The sharp declines came after the US Commerce Department reported that gross domestic product (GDP) decreased at an annual rate of 0.3per cent in Q1 2025, a surprise downturn largely attributed to a surge in imports and slowing consumer and government spending.
The volatility index VIX, often called Wall Street’s fear gauge, spiked 10.22per cent to 26.64, signaling rising market anxiety.
In commodities, gold dipped $20.50 to $3,313.10 per ounce, while oil dropped $0.53 to $59.89 per barrel. The US 10-year Treasury yield edged slightly lower to 4.168per cent , reflecting a modest flight to safety.
On the currency front, the euro weakened against the US dollar, with the EUR/USD pair trading at 1.137, down 0.002 or 0.149per cent.
The US economy unexpectedly shrank during the first quarter of the year, according to new data released Wednesday, primarily due to a surge in imports ahead of broad tariffs introduced by President Donald Trump.
Gross domestic product (GDP) in the world’s largest economy declined at an annual rate of 0.3% in the first quarter, following a 2.4% expansion in the final quarter of 2024, according to a preliminary estimate from the US Commerce Department.
“The decline in real GDP in the first quarter was driven by an increase in imports, slower consumer spending, and a drop in government expenditures,” the Commerce Department said.
US financial markets responded negatively to the report, with futures falling ahead of the opening bell on Wall Street.
“Just 100 days into his presidency, Donald Trump’s unpredictable tariff strategy is dragging down the economy, with businesses stockpiling imports ahead of a potential tariff crisis,” said Democratic Senator Elizabeth Warren in a statement following the GDP release.
Meanwhile, Wall Street premarket trading was mixed on Wednesday as companies continued reporting earnings and uncertainty surrounding Trump’s trade policies lingered.
S&P 500 futures fell 0.3%, Nasdaq futures dropped 0.5%, while Dow Jones Industrial Average futures edged up 0.1%.
Shares of Starbucks plunged nearly 9% after the company missed analysts’ estimates for both sales and profits in the second quarter. Despite notching its first quarterly sales gain in over a year, the coffee giant acknowledged that its recovery is still in progress.
Visa shares rose slightly, up less than 1%, after the company exceeded Wall Street’s expectations for second-quarter revenue and earnings. Visa noted that consumer spending remained strong last quarter, despite recent consumer confidence surveys showing growing concern about the effects of Trump’s tariffs.
Investors were also awaiting quarterly earnings reports from tech giants Microsoft and Meta, parent company of Facebook, scheduled for release after the market close.
Corporate leaders have voiced uncertainty over how long their companies can sustain profits amid the ongoing trade war, citing a lack of clear direction from the Trump administration.
There are growing fears that the president’s tariff policies could trigger a recession by disrupting global trade and driving prices higher across a wide range of products.
Later Wednesday, the government is expected to release its first estimate for US first-quarter GDP growth, with economists predicting growth of less than 1% during the January–March period.
A separate report on consumer spending, which includes the Federal Reserve’s preferred inflation measure, is also due.
In Europe, the eurozone economy grew by 0.4% in the first quarter—an improvement from the last quarter of 2024. However, the outlook is clouded by increased tariffs on exports from the 20-member euro currency zone.
Germany’s DAX index climbed 0.7% after the centre-left Social Democrats voted to support a coalition agreement, clearing the way for Friedrich Merz to become Germany’s next chancellor.
France’s CAC 40 also rose 0.7%, while the UK’s FTSE 100 edged up 0.2%.
In Asia, Japan’s Nikkei 225 index gained 0.6% to close at 36,045.38.
Japanese automaker stocks were mixed following Trump’s move to ease some tariffs on car and auto parts imports. Toyota Motor Corp. fell 1.6%, Honda Motor Co. rose 0.4%, and Nissan Motor Co. dipped 0.2%.
In Hong Kong, the Hang Seng index added 0.5% to 22,119.41, while China’s Shanghai Composite index slipped 0.2% to 3,279.03 as surveys showed a decline in export orders from Chinese manufacturers in April following the imposition of higher US tariffs.
South Korea’s Kospi dropped 0.3% to 2,556.61, while Australia’s S&P/ASX 200 jumped 0.7% to 8,126.20.
In energy markets, US benchmark crude oil declined 45 cents to $59.97 per barrel, while Brent crude, the global benchmark, fell 43 cents to $62.85 per barrel.
The US dollar strengthened to 142.93 Japanese yen from 142.35 yen. The euro weakened slightly to $1.1379 from $1.1386.