Schwab Market Update
Stocks Slide Early After GDP Data Show Q1 Decline
Published as of: April 30, 2025, 9:18 a.m. ET
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| The markets | Last price | Change | % change |
|---|---|---|---|
| S&P 500® index | 5,560.83 | +32.08 | +0.58% |
| Dow Jones Industrial Average® | 40,527.62 | +300.03 | +0.75% |
| Nasdaq Composite® | 17,461.32 | +95.18 | +0.55% |
| 10-year Treasury yield | 4.19% | +0.02 | -- |
| U.S. Dollar Index | 99.39 | +0.15 | +0.15% |
| Cboe Volatility Index® | 26.35 | +2.18 | +9.0% |
| WTI Crude Oil | $59.51 | -$0.91 | -1.49% |
| Bitcoin | $94,616.60 | -739.77 | -0.78% |
Disclosure
Major index values are as of Tuesday's close; others are as of 8:57 a.m. ET.
(Wednesday market open) On a tough morning for tech after disappointing earnings reports, investors had their attention diverted by weak first quarter U.S. growth data. Notably, today's first government estimate for gross domestic product (GDP) showed the U.S. economy contracting at an annual rate of –0.3%, well below the 0.4% gain expected by Wall Street, as tariff concerns took a toll. Stocks sank further on the news, threatening a six-session win streak for the S&P 500 index (SPX).
Before the fresh data, Wall Street had calmed approaching the end of the month, with major indexes about halfway back from their dramatic early April losses. Hopes for trade deals, falling Treasury yields, and technical "buy the dip" sentiment all contributed. That positive sentiment shifted early today on the GDP news, but "the drop was mostly due to trade," noted Collin Martin, director, fixed income strategy, at the Schwab Center for Financial Research. "That likely takes away some of the sting of the negative print, even though consumption was weak."
In the near term, labor market data is key as Friday's nonfarm payrolls report approaches with analysts expecting a sharp drop in jobs growth. There was a surge last week in the University of Michigan consumer sentiment's report category of consumers expecting higher unemployment. This could signal weak jobs data at some point, but not necessarily in this Friday's nonfarm payrolls report. Also, earnings pick up today and tomorrow with four mega caps reporting after each session's close. "Earnings season is better-than-expected so far, but guidance looking ahead continues to be murky at best, alongside an increasing number of companies withdrawing guidance," said Liz Ann Sonders, chief investment strategist at Schwab.
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Three things to watch
1. GDP deeper dive: Today's negative GDP reading appeared to reinforce recession worries, suggesting that economic weakness preceded the April 2 "liberation day" tariff announcement. It was the first GDP drop since the first quarter of 2022 and down from 2.4% GDP growth in the fourth quarter of 2024. However, a surge in imports as consumer and business demand got pulled forward before tariffs probably contributed to softness. The Federal Reserve's favored inflation meter, Personal Consumption Expenditures (PCE) prices, is due at 10 a.m. ET, pushed back by the GDP release. But the GDP report itself has a PCE component, and it was "way above expectations," Schwab's Martin said. "The 3.5% annualized quarterly increase in the Core PCE Price Index likely has investors worried about stagflation," he added. This could be hurting the market more than the headline GDP print and could explain a slight nudge higher in the benchmark 10-year Treasury note yield early on. The futures market still prices in less than 10% chance of a Fed rate cut next week, and 65% odds of a cut in June, with neither of those changing much immediately after GDP.
2. Final day could be volatile: The last trading days of several recent months featured heavy buying on Wall Street, especially from institutional investors. This could reflect portfolio rebalancing, corporations closing their books, and inflows from monthly salary investments. There's no guarantee this will happen again today simply because it happened in the past, naturally, but it's something to potentially keep in mind if you plan to trade because end-of-the-month flows could cause heavier-than-normal market swings the next few days, especially today. "Large institutional investors often deploy systematic strategies that involve buying or selling around certain points in time such as the final trading of the month. As a result, large orders can temporarily distort the supply and demand causing larger than normal price swings," said Alex Coffey, senior manager, trading and derivatives strategy at Schwab.
3. Federal employment drop, timing may affect nonfarm payrolls: Analysts expect a big drop in nonfarm payrolls to 130,000, from 228,000 in March. However, some predict much weaker and perhaps even negative growth, partly reflecting a big drop in federal government employment. Another factor is timing. The government collected its data soon after the April 2 tariff announcement as stocks hit 13-month lows. Corporations may have been hesitant to hire in these circumstances. The monthly Challenger job cuts report tomorrow could also be telling. Yesterday's March Job Openings and Labor Turnover Survey (JOLTS) missed expectations and hit a six-month low. And today's April ADP employment change report of 62,000 was well below the Briefing.com consensus of 128,000, though the private payrolls tracked by ADP don't always correspond with the government's official data.
On the move
- Starbucks (SBUX) fell 8.7% after its quarterly earnings missed Wall Street's consensus and same-store sales fell for fifth straight quarter.
- Snap (SNAP) fell 14% ahead of the open as investors reacted to the company not offering fresh second quarter guidance in its earnings report yesterday afternoon. The company had a solid first quarter from a revenue perspective as sales climbed 14%. Snap said in its release that it's "experienced headwinds" to start the current quarter. Daily active users rose to 460 million in the first quarter from 453 million the prior quarter.
- Visa (V) climbed 0.4% in pre-market trading after reporting mixed first quarter results and authorizing a new $30 billion stock buyback program. Consumer spending remained "resilient" during the reporting period, "even with macroeconomic uncertainty," Visa said in its earnings release.
- Super Micro Computer (SMCI) crumbled 16.9% ahead of the open as the server maker's preliminary quarterly results missed analysts' expectations and it delivered disappointing guidance below its previous projections. Barclays and JPMorgan Chase (JPM) cut their price targets on the company in the wake of the earnings. In its release, Super Micro blamed "delayed platform decisions" that moved sales into the company's current fiscal quarter.
- Etsy (ETSY) climbed 1.9% ahead of the open after stronger than expected quarterly revenue from the e-commerce company, though Etsy still reported a sharper-than-expected loss in earnings per share.
- AppLovin (APP) dropped 10% in pre-market trading ahead of earnings next week for the mobile technology company. The losses came amid a thin news flow and might be linked to weakness in other tech shares. This stock tends to be volatile.
- Nvidia (NVDA) fell 2.2% early Wednesday, hurt in part by weak guidance from Super Micro and what it possibly says about industry demand. Also, Seaport Research Partners gave Nvidia a Sell rating today with a $100 price target. The firm argued that positive fundamentals are "well understood and largely priced into the stock."
- Humana (HUM) added 4.9% soon before the open after earnings and revenue beat analysts' expectations. The health insurer also kept its previous guidance and expressed confidence in its growth outlook.
- Caterpillar (CAT) climbed 3.8% ahead of the open even though quarterly earnings from the manufacturing firm missed Wall Street's expectations. Caterpillar also lowered guidance amid the bite from tariffs. The strength in shares today could reflect bad news already being priced into the stock, which was down 20% since early November, Barron's noted.
- Factory activity in China slowed this month, with the official NBS Manufacturing PMI at 49, down from 50.5 in March and below analysts' expectations of 49.8, Trading Economics noted. Anything under 50 signals contraction. Both output and new orders declined. Foreign orders also dropped.
More insights from Schwab
Recession odds up: Barring a more permanent backpedaling in tariff policy by the White House, "recession odds appear to us to be better than ever," said Schwab's Sonders and Kevin Gordon, director, senior investment strategist, in their new analysis of past recessions and their economic impacts.
Tech earnings preview: Apple (AAPL), Microsoft (MSFT), Meta Platforms (META), and Amazon (AMZN) all share results today and tomorrow, kicking off with Microsoft and Meta opening their books after the close. While analysts expect all of them to grow earnings year over year, investors will probably be more interested in guidance and what they're doing to shield themselves from the worst tariff impacts. Also, there could be more insight into AI spending, with ramifications for companies like Advanced Micro Devices (AMD) and Nvidia. There've been reports in the media that AI spending could slow. And, due to tariffs, a solid first quarter may not give companies much of a boost. "If Apple ends up reporting strong iPhone sales, investors will likely wonder whether is it a 'pull-forward' or a true indication of demand," said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research. "If they have strong results, there's a good chance it will be viewed as a temporary demand spike to secure 'pre-tariff' phones."
Chart of the day
Data sources: S&P Dow Jones Indices. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
The S&P 500 index (SPX—candlesticks) enters the last day of April in an interesting position, just below the 50-day moving average (blue line) of 5,613. It hasn't been at or above the 50-day all month, and that likely represents technical resistance. Above that, there's a gap near the April highs of around 5,700 (red line), with that level last seen just before tariff "liberation day" on April 2. A move above the 50-day might mean another test of that pre-tariff level. It hasn't closed above the 50-day since late February. At the same time, momentum has improved, a positive sign technically. The Relative Strength Index (RSI—bottom of chart) is now at a middle of the range level of 54, up from dramatically oversold conditions below 30 earlier this month.
The week ahead
Check out the Investors' Calendar for a summary of the top economic events and earnings reports on tap this week.
May 1: April ISM Manufacturing PMI® and expected earnings from Eli Lilly (LLY), CVS Health (CVS), Mastercard (MA), McDonald's (MCD), Apple (AAPL), Amazon (AMZN), U.S. Steel (X), Roku (ROKU), Amgen (AMGN), and MicroStrategy (MSTR).
May 2: April nonfarm payrolls and expected earnings from ExxonMobil (XOM) and Chevron (CVX).
May 3: Expected earnings from Berkshire Hathaway (BRK.B).
May 5: April ISM Services PMI® and expected earnings from Palantir (PLTR).
May 6: Start of FOMC meeting and expected earnings from Archer-Daniels-Midland (ADM), Duke Energy (DUK), Marriott International (MAR), Advanced Micro Devices (AMD), Wynn Resorts (WYNN), and Rivian Automotive (RIVN).
