Wall Street is set for a volatile Wednesday after first-quarter GDP data showed an unexpected economic contraction, stoking fears that a recession may already be underway.
The U.S. economy shrank by 0.3% on an annualized basis last quarter, down from 2.4% growth in the previous quarter and well below the expected 0.4% growth, official advance statistics showed.
The outcome marked the first quarterly contraction since the second quarter of 2022.
In addition, U.S. private employers added 62,000 jobs in April, according to ADP National Employment Report, the lowest since July 2024 and well below predictions of 108,000.
Broad-based equity losses followed during premarket trading in New York as investors digested signs of weakening growth, elevated inflation, and deteriorating trade balances.
Futures on the S&P 500 fell 1.28% to 5,489.61 by 9:00 a.m. ET, shedding 71 points.
Contracts on the Dow Jones Industrial Average declined by 336 points, or 0.8%, to 40,191. The tech-heavy Nasdaq 100 underperformed, plunging 1.9% to 19,184, while the small-cap Russell 2000 index dropped 1.7% to 1,944.
Recession odds for 2025 climbed to 74%, their highest level yet, according to data from CFTC-regulated betting platform Kalshi. Under Kalshi’s terms, a $100 bet on a recession now yields $131 if the U.S. sees two consecutive quarters of negative GDP growth.