Markets Slide as GDP Contracts, Job Growth Slows; Big Tech Set to Report

U.S. stocks fell in midday trading Wednesday as investors digested a surprise economic contraction and signs of softening in the labor market, just hours before Big Tech earnings begin to roll in.

The Dow Jones Industrial Average declined 288.35 points, or 0.71%, to 40,239.30. The Nasdaq Composite dropped 241.88 points, or 1.39%, to 17,219.40, while the S&P 500 fell 54.21 points, or 0.97%, to 5,506.62.

The losses came after the Commerce Department reported that U.S. gross domestic product shrank at a 0.3% annualized pace in the first quarter—marking the first decline since early 2022. Economists had expected a 0.4% increase following 2.4% growth in the final quarter of 2024. The contraction was driven largely by a surge in imports and higher-than-forecast prices, underscoring the mounting challenges facing the economy as 2025 gets underway.

Further weighing on sentiment, the ADP Employment Change report showed private-sector employers added just 62,000 jobs in April, well below the 115,000 consensus estimate and sharply down from March’s revised 208,000 gain. The April reading was the weakest since January.

“Unease is the word of the day,” said ADP Chief Economist Nela Richardson. “Employers are trying to reconcile policy and consumer uncertainty with a run of mostly positive economic data. It can be difficult to make hiring decisions in such an environment.”

The slowdown was broad, with education and health services shedding 23,000 positions and business services losing 2,000. Leisure and hospitality remained a relative bright spot, adding 27,000 jobs. Pay growth remained stable but uneven: job changers saw wages rise 6.9% year over year, while job stayers logged a 4.5% increase.

Markets are now bracing for a slate of tech earnings that could help stabilize sentiment. microsoft and meta are set to report after the bell, kicking off a pivotal earnings stretch that also includes amazon and Apple later in the week.

Watch: Apple Earnings Preview What Investors Need to Know

In a note Wednesday, Wedbush analyst Dan Ives wrote that “investors are set to hear from the rest of the Big Tech stalwarts…with Microsoft, Meta, Amazon and Apple on tap.” He added that the firm expects “generally very strong results,” driven by robust cloud spending, rebounding digital advertising, and accelerating AI investments​.

Still, Ives acknowledged that tariff uncertainty “is the black cloud overhang on the tech sector,” with Apple and chipmakers most exposed to ongoing trade tensions with China.

Even so, Wedbush remains bullish: “This week [should be] a confidence booster rather than adding to market fears,” Ives noted, citing resilient enterprise demand and protected AI budgets despite the policy backdrop​.

With sentiment fragile and volatility elevated, investors are looking to Silicon Valley for clarity—and potentially, confidence.