The U.S. economy experienced a contraction of 0.3% in the first quarter of 2025, contrary to expectations of a 0.4% growth, primarily as businesses rushed to import goods before tariffs took effect. This unexpected downturn triggered a sharp sell-off in stock markets, with the Dow Jones dropping over 600 points and notable declines in the tech sector. Companies like Starbucks and Snap faced substantial setbacks, with Starbucks missing earnings estimates and Snap forgoing guidance due to tariff uncertainties, amplifying investor fears of a recession.
The economic contraction in the U.S. reached 0.3% in Q1 2025, significantly lower than the expected expansion, due to pre-tariff stockpiling by corporations.
Stock markets responded drastically, with the Dow falling by over 600 points and a notable decline in major tech stocks during fears of a recession.
Starbucks downgraded to a 'neutral' rating by Goldman Sachs following missed Q1 performance estimates, contributing to an 8% stock drop.
Snap's earnings guidance was omitted amid tariff concerns, leading to over a 15% loss in its stock during market turmoil.
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