US Avoids Negative Growth Shock... Mixed Close for Three Major Indices [New York Stock Market Briefing]
Summary
- The US economy recorded negative growth with a first-quarter GDP growth rate of -0.3%, but the strong 3.0% increase in private spending helped offset some of the stock market decline.
- The Dow and S&P500 indices closed up 0.35% and 0.15% respectively, while the Nasdaq index fell 0.09%, showing mixed results.
- Expectations for US-China trade negotiations and increased private spending contributed to the stock market recovery, but the 'Magnificent 7' stocks and Starbucks showed weakness.
Dow & S&P500 Rise for 7 Consecutive Trading Days
Nasdaq Closes Slightly Lower
The New York Stock Exchange managed to recover early losses despite the shock of economic contraction.
On the 30th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 40,669.36, up 141.74 points (0.35%) from the previous session. The S&P500 index rose 8.23 points (0.15%) to 5,569.06, while the Nasdaq index fell 14.98 points (0.09%) to close at 17,446.34.
The US Department of Commerce announced that the preliminary estimate for the first quarter GDP growth rate was -0.3% (annualized quarter-on-quarter). The surge in imports ahead of the Trump administration's tariff implementation is cited as a major cause of the contraction. It is the first time in three years that the US economy has contracted on a quarterly basis since the first quarter of 2022 (-1.0%).
Despite the negative growth shock, major stock indices started lower but managed to recover much of the losses as the increase in private spending, which shows the underlying trend of US economic demand, was strong at 3.0%. Expectations for US-China trade negotiations also boosted stock prices.
The 'Magnificent 7', referring to seven giant tech companies, showed weakness. Amazon fell more than 1%, and Tesla dropped more than 3%. Starbucks, which released disappointing first-quarter results after the previous day's close, fell more than 5%.
President Donald Trump attributed the negative growth news and early market weakness to the previous Joe Biden administration, stating, "This is Biden's stock market, not Trump's." He added, "When prosperity begins, it will be at an unprecedented level," urging patience.
Reporter Hong Min-sung, Hankyung.com mshong@hankyung.com
Korea Economic Daily
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