WASHINGTON (dpa-AFX) - After trending higher over the past several sessions, stocks have pulled back sharply during trading on Wednesday. The major averages have all shown significant moves to the downside, with the Nasdaq and the S&P 500 pulling back off their best closing levels in almost a month.
Currently, the major averages are well off their lows of the session but still firmly negative. The Nasdaq is down 285.55 points or 1.6 percent at 17,175.77, the S&P 500 is down 67.34 points or 1.2 percent at 5,493.49 and the Dow is down 352.69 points or 0.9 percent at 40,174.93.
Traders are cashing on the recent strength in the markets following the release of a Commerce Department report showing the U.S. economy unexpectedly shrank in the first three months of 2025.
The Commerce Department said real gross domestic product fell by 0.3 percent in the first quarter after surging by 2.4 percent in the fourth quarter of 2024. Economists had expected GDP to rise by 0.4 percent.
The unexpected dip by GDP primarily reflected an increase in imports, which are a subtraction in the calculation of GDP.
Imports skyrocketed by 41.3 percent in the first quarter as businesses rushed to import goods before tariffs went into effect, subtracting 5.0 percentage points from GDP growth.
A decrease in government spending also weighed on GDP, while increases in investment, consumer spending and exports helped limit the downside.
Adding to the negative sentiment, payroll processor ADP released a report showing private sector employment in the U.S. increased by much less than expected in the month of April.
ADP said private sector employment climbed by 62,000 jobs in April after surging by a downwardly revised 147,000 jobs in March.
Economists had expected private sector employment to jump by 125,000 jobs compared to the addition of 155,000 jobs originally reported for the previous month.
'Between the GDP report, April's ADP report, and a pullback in business and consumer surveys last month, the economy is losing momentum and risks to the economic outlook are increasing,' said Bill Adams, Chief Economist for Comerica Bank.
Meanwhile, traders have largely shrugged off a typically closely watched report showing consumer prices were virtually unchanged in the month of March.
Sector News
Energy stocks are turning in some of the market's worst performances on the day, with the Philadelphia Oil Service Index and the NYSE Arca Oil Index tumbling by 3.1 percent and 2.2 percent, respectively.
The weakness in the sector comes as the price of crude oil for June delivery is slumping $0.87 to $59.55 a barrel despite the release of a report showing a much bigger than expected weekly decrease by U.S. crude oil inventories.
Significant weakness is also visible among steel stocks, as reflected by the 2.1 percent plunge by the NYSE Arca Steel Index.
Financial, retail and transportations tocks are also seeing considerable weakness, moving lower along with most of the other major sectors.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Wednesday. Japan's Nikkei 225 Index advanced by 0.6 percent, while China's Shanghai Composite Index dipped by 0.2 percent.
Meanwhile, the major European markets have all moved modestly lower on the day. While the German DAX Index is down by 0.2 percent, the U.K.'s FTSE 100 Index is down by 0.2 percent and the French CAC 40 Index is down by 0.1 percent.
In the bond market, treasuries have shown a lack of direction as traders digest the latest U.S. economic data. Currently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 4.166 percent.
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