The Dow and S&P 500 closed higher after a late rally on Wednesday, erasing declines from most of the session after data showed the economy contracted in the first quarter for the first time in three years. The TSX closed slightly in the red, but well off its lows for the day.
In a day filled with economic data, the U.S. Commerce Department said its advance gross domestic product report showed a 0.3% contraction for the first quarter, falling short of expectations for 0.3% growth, according to economists polled by Reuters.
A separate report on monthly U.S. consumer spending, which accounts for more than two-thirds of economic activity, showed a jump of 0.7% in March, topping expectations for a 0.5% rise. Both the GDP and consumer spending data appeared to be affected by the trade war, as businesses and consumers pulled forward spending to avoid tariffs.
A gauge of the labour market released Wednesday indicated U.S. private payrolls growth slowed more than expected in April. The ADP National Employment Report revealed an increase of only 62,000 jobs, well short of the 115,000 estimate, after a downwardly revised 147,000 gain in March.
On the plus side, a gauge of inflation showed price pressures cooled in March, stemming some fears for a possible stagflation environment, when growth slows and prices rise.
Wednesday’s reports join a series of data releases this month that have pointed to an increasingly uncertain outlook for the U.S. economy, as the fallout from the Trump administration’s steep tariffs and unpredictable trade policy takes effect.
“The disappointing (U.S.) jobs and GDP numbers this week - they don’t really reflect the effect all these tariffs have had yet,” said Michael Sprung, president of Sprung Investment Management. “Going forward, it doesn’t appear that things are going to get better any time soon.”
Canadian data was also downbeat Wednesday, showing that gross domestic product contracted by 0.2% in February on a monthly basis as activities across mining, oil and gas and construction sectors shrank.
The Dow Jones Industrial Average rose 141.74 points, or 0.35%, to 40,669.36, the S&P 500 gained 8.23 points, or 0.15%, to 5,569.06 and the Nasdaq Composite lost 14.98 points, or 0.09%, to 17,446.34.
The Dow had fallen as much as 1.9%, the S&P lost as much as 2.3% and the Nasdaq shed as much as 2.9% during the session.
For the month, the S&P 500 fell 0.76%, the Nasdaq rose 0.85%, and the Dow fell 3.17%.
The Toronto Stock Exchange’s S&P/TSX composite index ended down 32.8 points, or 0.1%, at 24,841.68.
For the month, it was down 0.3%, its third straight monthly decline. Still, it has rebounded 10.4% from a near eight-month low earlier in April.
The TSX technology sector Wednesday fell 1.8%, giving back some of its gains in recent days. Shares of e-commerce company Shopify Inc ended 4.2% lower.
Energy was down 2.3% as the price of oil settled 3.7% lower at US$58.21 a barrel on concerns that trade tensions could erode fuel demand.
Consumer staples added 1.7%, helped by a gain of 2.5% for the shares of Loblaw Companies Ltd after the retailer exceeded analysts’ expectations for first-quarter revenue and profit.
The interest-rate-sensitive utilities and real estate sectors added 1% and 0.9% respectively as bond yields fell. The Canadian 10-year yield was down 4.7 basis points at 3.087%, trading near its lowest level since April 17.
On Wall Street, consumer staples were among the best performing sectors, up 0.7% in part due to a 3.8% climb in chocolate and snack company Mondelez after its quarterly results topped expectations.
After the closing bell, Meta Platforms rose more than 4% after its quarterly earnings beat estimates, and Microsoft shot up nearly 6% after its results topped revenue estimates as businesses ramped up spending on AI tools.
Concerns about a deceleration in AI investment had been spurred earlier in the session by Super Micro Computer, which cut its third-quarter forecasts due to delays in customer spending, while Snapchat parent Snap said it would not provide a second-quarter financial forecast, the latest in a string of companies in various sectors that have withdrawn their outlooks.
Super Micro tumbled 11.5% and Snap plummeted 12.4%.
Dow component Caterpillar shares were choppy after its disappointing quarterly results, ending with a 0.6% gain.
Declining issues outnumbered advancers by a 1.19-to-1 ratio on the NYSE and by a 1.28-to-1 ratio on the Nasdaq. The S&P 500 posted 10 new 52-week highs and three new lows while the Nasdaq Composite recorded 39 new highs and 85 new lows. Volume on U.S. exchanges was 16.97 billion shares, compared with the 19.57 billion average for the full session over the last 20 trading days.
Reuters, Globe staff