Disappointing Economic Data May Lead To Pullback On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a notably lower open on Wednesday, with stocks likely to give back ground after trending higher over the past several sessions.

Traders may look to cash in on the recent strength in the markets, which saw the S&P 500 close higher for six straight sessions and reach its best closing level in almost a month.

The futures saw further downside following the release of a Commerce Department report showing the U.S. economy unexpectedly shrank in the first quarter of 2025.

The report 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.

A decrease in government spending also weighed on GDP, while increases in investment, consumer spending and exports helped limit the downside.

Payroll processor ADP also released a report this morning 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.

Shortly after the start of trading, the Commerce Department is due to release its report on personal income and spending in the month of March. The report includes the Federal Reserve's preferred readings on consumer price inflation.

After showing a lack of direction early in the session, stocks moved mostly higher over the course of the trading day on Tuesday. With the upward move, the S&P 500 closed higher for the sixth straight session, reaching its best closing level in almost a month.

The major averages ended the day off their highs of the session but still firmly positive. The Dow jumped 300.03 points or 0.8 percent to 40,527.62, the S&P 500 climbed 32.08 points or 0.6 percent to 5,560.83 and the Nasdaq rose 95.18 points or 0.6 percent to 17,461.32.

The strength that emerged on Wall Street came amid positive developments on the trade front, with Commerce Secretary Howard Lutnick telling CNBC the Trump administration had reached its first trade deal.

Lutnick declined to name the country involved but said he expects their prime minister and parliament to give their approval "shortly."

Treasury Secretary Scott Bessent also told reporters the U.S. is "very close" to a trade deal with India, has had "substantial talks" with Japan and has "the contours of a deal" with South Korea.

Earlier in the day, traders seemed reluctant to make significant moves ahead of the release of key earnings and economic news in the coming days.

Four of the "Magnificent Seven" companies - Amazon (AMZN), Apple (AAPL), Meta Platforms (META) and Microsoft (MSFT) - are among the companies due to report their quarterly results this week.

The Labor Department's monthly jobs report is also likely to be in focus later this week along with the Federal Reserve's preferred readings on consumer price inflation.

Pharmaceutical stocks showed a significant move to the upside on the day, driving the NYSE Arca Pharmaceutical Index up by 1.4 percent.

Drug giant Pfizer (PFE) helped lead the sector higher after reporting better than expected first quarter earnings and maintaining its full-year guidance.

Notable strength also emerged among telecom stocks, as reflected by the 1.1 percent gain posted by the NYSE Arca North American Telecom Index.

Software, networking and banking stocks also saw some strength on the day, while gold and semiconductor stocks moved to the downside.

Commodity, Currency Markets

Crude oil futures are sliding $0.63 to $59.79 a barrel after plunging $1.63 to $60.42 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $3,299.80, down $33.80 compared to the previous session's close of $3,333.60. On Tuesday, gold fell $14.10.

On the currency front, the U.S. dollar is trading at 142.97 yen compared to the 142.33 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1369 compared to yesterday's $1.1387.

Asia

Asian stocks ended mixed on Wednesday after a slew of U.S. companies suspended or tweaked their full year guidance and regional factory activity data disappointed.

Traders also awaited key U.S. GDP and inflation data as well as earnings from big tech companies like Apple and Amazon for directional cues as President Donald Trump marked 100 days in office during his second term.

The dollar drifted lower after data showed U.S. job openings fell to 7.19 million in March—the lowest since Sept 2024 due to trade uncertainty.

Gold dipped towards $3,300 per ounce, while oil headed for its biggest, full-month loss for April on uncertainty over U.S. trade policy and global economic growth.

Chinese shares ended lower on growth worries after a survey showed Chinese factory activity contracted at the fastest pace in 16 months in April. The official purchasing managers' index came in at 49.0 in April due to the escalating trade war with the U.S.

The Shanghai Composite Index dipped 0.2 percent to 3,279.03, while Hong Kong's Hang Seng Index rose 0.5 percent to 22,119.41.

U.S. Treasury Secretary Scott Bessent on Tuesday said during a press conference at the White House that China could quickly lose 10 million jobs if the U.S. keeps tariffs in place at the current level of 145 percent.

Meanwhile, Reuters said citing sources that China has waived the 125 percent tariff on ethane imports from the United States imposed earlier this month.

Japanese markets advanced as investors reacted to mixed economic reports and looked ahead to Thursday's BOJ rate decision.

Japanese factory output fell last month, while retail sales rose slightly less than the median market forecast, data showed earlier today.

The Nikkei 225 Index climbed 0.6 percent to 36,045.38 and posted its first monthly gain for the year on optimism surrounding a potential trade deal. The broader Topix Index closed 0.6 percent higher at 2,667.29.

Sony Group shares soared 7.1 percent on reports that the entertainment and electronics company is mulling spinning of its semiconductor unit, with a decision expected as soon as this year.

Seoul stocks snapped a three-day winning streak, with auto, battery and chip-related stocks leading losses. The Kospi fell 0.3 percent to 2,556.61.

Shares of Samsung Electronics dropped half a percent. The company has warned over new tariffs and export curbs after posting its highest-ever first quarter revenue on the back of strong Galaxy S25 smartphone sales.

Australian markets rose for a fifth straight day as data showed core inflation in the country slowed to a three-year low in the first quarter, reinforcing expectations for an RBA rate cut in May.

The benchmark S&P/ASX 200 Index climbed 0.7 percent to 8,126.20, led by gains in financial and consumer stocks. The broader All Ordinaries Index settled 0.6 percent higher at 8,341.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index slumped 1.0 percent to 11,903.31, marking its second straight session of losses amid U.S. tariff worries.

Europe

European stocks have moved to the upside on Wednesday amid expectations of potential trade deals with the United States.

Media reports suggested that China had quietly compiled a list of U.S.-made goods exempt from its 125 percent tariffs, seeking to ease trade tensions without public concessions.

U.S. President Donald Trump said he believes the U.S. will have a deal with India on trade.

The White House has also had "substantial talks" with Japan and "the contours of a deal" with South Korea could be coming together, Treasury Secretary Scott Bessent said.

Investors were also reacting to mixed regional data. Preliminary data showed the Eurozone economy expanded by 0.4 percent in the three months to March 2025 after growing by 0.2 percent in the fourth quarter of 2024.

The German economy recovered in the first quarter, driven by higher private consumption and investment, flash data from Destatis revealed today.

Gross domestic product grew 0.2 percent sequentially, offsetting the 0.2 percent fall in the preceding quarter. The rate also matched economists' expectations.

Retail sales fell 0.2 percent on a monthly basis in March, reversing a 0.2 percent rise in February, a separate report revealed. Sales were expected to decline 0.4 percent.

Elsewhere, U.K. house price declined more than expected in April following the end of stamp duty holidays, data from the Nationwide Building Society showed.

House prices logged a monthly drop of 0.6 percent after remaining flat in March. The decline was worse than economists' forecast of 0.1 percent.

In France, the economy avoided a technical recession in the first quarter with a marginal expansion.

GDP grew 0.1 percent from the fourth quarter, when the economy shrank 0.1 percent, according to flash data from the statistical office INSEE.

While the French CAC 40 Index is up by 0.4 percent, the German DAX Index is up by 0.3 percent and the U.K.'s FTSE 100 Index is up by 0.1 percent.

Logitech International has risen. The computer parts maker outlined plans to mitigate the impact of U.S. tariffs after reporting a 7 percent net sales growth for fiscal year 2025.

German engine maker Deutz AG has also moved sharply higher after confirming its annual targets.

Stellantis NV has also jumped. The parent company of Jeep, Peugeot and Fiat, suspended its 2025 earnings forecast, citing U.S. tariff uncertainties.

Peer Societe Generale has also surged after reporting a sharp increase in first-quarter earnings.

Meanwhile, French lender Credit Agricole has slumped after reporting a decrease in first quarter profits.

Mercedes-Benz has also moved to the downside as it reported a decline in car business profitability for the first quarter.

Banco Santander has also tumbled after its Brazilian, British and Mexican units missed first quarter net income estimates.

Prudential has also fallen despite the insurer reporting a 12 percent increase in new business profit for the first quarter.

U.S. Economic News

Payroll processor ADP released a report on Wednesday 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.

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

The Commerce Department also released a report showing the U.S. economy unexpectedly shrank in the first quarter of 2025.

The report 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.

A decrease in government spending also weighed on GDP, while increases in investment, consumer spending and exports helped limit the downside.

At 9:45 am ET, MNI Indicators is scheduled to release its report on Chicago-area business activity in the month of April. The Chicago business barometer is expected to dip to 45.5 in April after climbing to 47.6 in March, with a reading below 50 indicating contraction.

The Commerce Department is due to release its report on personal income and spending in the month of March at 10 am ET. The report includes the Federal Reserve's preferred readings on consumer price inflation.

Personal income is expected to rise by 0.4 percent and personal spending is expected to climb by 0.6 percent, while consumer prices are expected to come in unchanged and core consumer prices, which exclude food and energy prices, are expected to inch up by 0.1 percent.

Also at 10 am ET, the National Association of Realtors is scheduled to release its report on pending home sales in the month of March. Pending home sales are expected to dip by 0.3 percent in March after surging by 2.0 percent in February.

The Energy Information Administration is due to release its report on oil inventories in the week ended April 25th at 10:30 am ET.

At 11 am ET, the Treasury Department is due to announce the details of next week's auctions of three-year and ten-year notes and thirty-year bonds.