A trio of bad data points snapped a streak of market gains for the stock market on Wednesday, dragging US indexes lower as fearss of a recession ramp up.

Investors first digested disappointing GDP data that shows the economy contracted last quarter amid seismic shifts in US trade policy. The Dow Jones fell as much as 700 points after the opening bell, with sharp drawdowns in the S&P 500 and Nasdaq Composite.

chart for wrap

Trump was quick to shift blame after the data dropped Wednesday morning, pointing to former President Joe Biden as the reason for the economic weakness.

“Our Country will boom, but we have to get rid of the Biden ‘Overhang.’ This will take a while, has NOTHING TO DO WITH TARIFFS, only that he left us with bad numbers, but when the boom begins, it will be like no other. BE PATIENT!!!” he said on Truth Social.

Stock index pared the deepes losses by late Wednesday morning.

Here’s where major US indexes stood around 11:15 a.m. ET:

First-quarter GDP

The economy contracted in the first three months of 2025.

The data marks the first contraction since 2022, and is a far cry from the prior quarter’s 2.4% growth rate. The decrease largely reflects a surge in imports — a component of GDP calculations — as consumers and businesses rushed to get ahead of Trump’s broad-sweeping tariff policy.

“This artificial front-loading of demand sets the stage for a sharper demand cliff in Q2—a far more troubling phase of the ongoing economic slowdown,” warned EY chief economist Gregory Daco.

For investors, it suggests a step closer toward recession, a scenario increasingly priced in by Wall Street. However, commentators acknowledged that the report was particularly noisy, and reflected an economy before Trump’s biggest tariffs actually took effect in April.

“The fall in real activity and acceleration in prices from today’s GDP report hints at potential stagflation but is still more modest in outcome than dire projections,” saidMichael Reynolds, Glenmede’s vice president of investment strategy. “Tariff-driven inflation and impacts on business/consumer spending will likely add to this concern in the coming months.”

Personal Consumption Expenditures

Wednesday’s inflation reading also didn’t do investors any favors. The March reading of the Fed’s preferred inflation gauge bolstered the case for the economy to possibly enter a period of stagflation, a dire combo of low growth and high inflation.

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Though PCE data for March met expectations, the gauge came in ahead of Trump’s tariff escalations. According to Capital Economics, core inflation “will inevitably rebound sharply in the coming months.”

Core PCE, an inflation measure favored by the Federal Reserve, rose 0.3% month-over-month, while the annual rate was 2.6%.

ADP private payrolls

Private payroll growth dropped in April to 62,000 for the month, barely halfway to meeting expectations of 120,000, offering more evidence that the economy is heading into a slowdown. The data marked the weakest month since July 2024, and is likely to create more tension ahead of Friday’s non-farm payrolls data.

“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,” wrote Bill Adams, chief economist for Comerica Bank. “At the same time, inflation picked up in the first quarter and looks set to accelerate further near term.”