US Session: Wall Street starts in the red amid economic slowdown and trade tensions

Market Update: Weak U.S. Data, Trade Tensions Pressure Stocks

U.S. equity indices edged lower shortly after the session opened, following economic data that signaled a loss of momentum in the world’s largest economy at the start of 2025. The combination of persistent inflation and growing concerns about the economic toll of President Donald Trump’s trade war weighed on sentiment.

Caterpillar Inc., often seen as a bellwether for the global economy, warned of a slight decline in sales this year if tariffs persist and the U.S. slips into recession. Investors are also awaiting earnings reports from Microsoft Corp. and Meta Platforms Inc., due after the market close.

Meanwhile, 10-year Treasury yields remained flat at 4.17%, indicating cautious investor sentiment amid economic uncertainty.

Key Data Points and Policy Signals:

• Q1 GDP contracted for the first time since 2022, reflecting the impact of pre-tariff import surges and weakened consumer demand. The figure also provides an early look at the economic consequences of Trump’s trade policies, ahead of broader tariff implementation on April 2.
• Private-sector hiring slowed in April, falling to the lowest level in nine months, suggesting cooling labor demand amid growing economic uncertainty.
• Investors are now looking ahead to Friday’s report on personal income and spending, which will include the Fed’s preferred inflation measure — the Core PCE Price Index.
• President Trump, marking his 100th day in office, criticized Fed Chair Jerome Powell, while defending his economic and trade policies.
• In bond markets, the U.S. Treasury maintained its guidance on long-term debt issuance volumes, while hinting it may expand buybacks of older securities, possibly to support liquidity and manage yields.