Investing.com-- The S&P 500 ended flat Wednesday, after cutting losses as rising hopes for easing U.S.-China trade tensions offset data showing a surprise decline in first-quarter
At 2:44 PM ET (19:44 GMT), the Dow Jones Industrial Average rose 141 points, or 0.4%, the S&P 500 index fell 0.01%, and the NASDAQ Composite slipped 0.1%.
It has been a turbulent month on Wall Street, with the major averages gradually narrowing the month’s losses after the announcement of U.S. tariffs at the start of the month prompted heavy selling, pushing the benchmark S&P 500 index briefly into bear market territory.
US economy contracted in Q1
The sharp losses at the start of April were prompted by fears the trade tariffs would hit growth in the largest economy in the world.
The U.S. economy unexpectedly contracted in the first quarter, data released earlier Wednesday showed, as U.S. gross domestic product contracted by 0.3% on an annualized basis during the January to March period. In the fourth quarter, it had grown by 2.4%. Economists had predicted slight expansion of 0.2%.
The economy was hurt by a 41.3% surge in imports in Q1, the most in five years, as consumers and businesses pull forward buying ahead of planned tariffs.
Additionally, U.S. private employers added far fewer jobs than anticipated in April, as private payrolls rose by 62,000 this month, slipping from a downwardly-revised 147,000 in March, the ADP National Employment Report showed on Wednesday.
Earlier this week, the consumer confidence index dropped to its lowest reading since May 2020, data showed on Tuesday, while JOLTS job openings for March fell to 7.192 million from 7.48 million.
US reportedly reaching out to China to stoke further hopes of easing trade tensions
The US has reportedly initiated contact with China, showing interest in discussing tariff-related matters, according to a post by Yuyuantantian, an account on Weibo (NASDAQ:WB) (NASDAQ:WB), a popular Chinese social media platform, that is linked with China Central Television, a state-run media outlet.
Sentiment had been improving on the hope that the worst of the tariffs announcements may be behind the market, helped by U.S. President Donald Trump signing two orders before the closing bell on Tuesday to ease the impact of auto tariffs, offering tax credits and tariff relief on materials.
The decision came as Trump visited Michigan, a major auto manufacturing hub, just before 25% tariffs on auto parts were set to begin.
In another positive note, Commerce Secretary Howard Lutnick told CNBC that the U.S. was close to announcing a major trade deal.
Microsoft, Meta results in focus
This busy earnings week, with about one-third of S&P 500-listed firms slated to post results, continues, with the focus mostly on numbers from software giant Microsoft (NASDAQ:MSFT) and Facebook-owner Meta Platforms (NASDAQ:META) after the close Wednesday.
The companies are part of a slew of "Magnificent Seven" mega-cap tech players set to report this week, with iPhone-maker Apple (NASDAQ:AAPL) and e-commerce titan Amazon (NASDAQ:AMZN) scheduled to unveil earnings after the bell on Thursday. These groups have led markets higher in recent years, but have largely underperformed so far this year.
Elsewhere on Wednesday, Starbucks (NASDAQ:SBUX) stock fell nearly 6% after the coffee chain’s global comparable sales declined for the fifth straight quarter, with its turnaround strategy struggling to bear fruit.
Industrial giant Caterpillar (NYSE:CAT) reported a lower first-quarter profit, hurt by softer demand due to economic uncertainty.
Norwegian Cruise Line (NYSE:NCLH) stock fell more than 7% after the cruise operator reported disappointing first-quarter earnings, and lowered its full-year adjusted net income guidance, citing softening demand.
Super Micro Computer (NASDAQ:SMCI) stock slumped 11.5% after the AI server maker cut its third-quarter revenue and profit expectations due to delays in customer spending, amplifying worries of a pullback in AI-linked investments.
Snap (NYSE:SNAP) stock dropped more than 12.5% after the Snapchat parent reported better-than-expected first-quarter revenue but declined to provide guidance, citing macroeconomic uncertainties that could weigh on advertising demand.
(Peter Nurse, Ayushman Ojha contributed to this article.)