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Q1 GDP contracts at 0.3% rate

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SMCI plunges after Q3 forecast cut

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Major US indexes on pace for monthly declines

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Indexes off: Dow 0.03%, S&P 500 0.31%, Nasdaq 0.68%

(Updates to afternoon US trading)

By Chuck Mikolajczak

NEW YORK, April 30 (Reuters) - U.S. stocks stumbled on

Wednesday after data showed the economy contracted in the first

quarter for the first time in three years, underscoring concerns

about the impact of U.S. tariffs and the global trade war on

worldwide growth.

In a session filled with economic data, the 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 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.

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.

A gauge of the labor market indicated U.S. private payrolls

growth slowed more than expected in April, as 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 the potential of slow

growth and high prices, also known as stagflation.

"It's important to realize that a large chunk of the fall in

GDP is due to the sharp increase in imports, which takes away

from GDP growth, and that's probably due to the expectation of

tariffs," said Oliver Pursche, senior vice president and adviser

at Wealthspire Advisors in Westport, Connecticut.

"If you were to normalize that, you end up with positive GDP

growth for the quarter, but it certainly doesn't bode well for

Q2, which is why the market is selling off."

The Dow Jones Industrial Average fell 10.87 points, or

0.03%, to 40,524.47, the S&P 500 lost 17.27 points, or

0.31%, to 5,543.56 and the Nasdaq Composite lost 118.03

points, or 0.68%, to 17,343.24.

Traders are now pricing in a full percentage point interest rate

cut from the Federal Reserve by the end of the year, although

recent comments from Fed Chair Jerome Powell and other officials

have indicated the central bank is likely to be cautious before

adjusting policy.

The defensive consumer staples led gains among the 11

major S&P sectors, buoyed in part by a jump of nearly 5% in

chocolate and snack company Mondelez ( MDLZ ) after its

quarterly results topped expectations.

After the closing bell, "Magnificent Seven" members Meta

Platforms ( META ) and Microsoft ( MSFT ) were due to post their

results that investors will eye for clarity on the outlook for

AI-focused investments, which have helped fuel the stocks rally

in recent years.

Meta shares were down nearly 3%, while Microsoft ( MSFT ) shed 1.1%.

Adding to concerns about a deceleration in AI investment, Super

Micro Computer ( SMCI ) 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 and Snap shares both fell more than 14%.

Caterpillar ( CAT ) fell 1.3% as one of the biggest drags on the

Dow after its disappointing quarterly results.

After a sharp slump following the April 2 tariff announcements

by U.S. President Donald Trump, stocks have rebounded, but the

three major U.S. indexes are still poised for monthly declines.

The S&P 500 was on track to snap a six-session streak of gains,

its longest since November.

Wednesday marks 100 days since Trump took office. Changes in

trade policies and tariffs have heightened uncertainty and

fueled volatility, negating initial enthusiasm after his

November election over the possibility of business-friendly

policies such as deregulation and tax cuts.

Declining issues outnumbered advancers by a 2.31-to-1 ratio on

the NYSE and by a 1.79-to-1 ratio on the Nasdaq.

The S&P 500 posted eight new 52-week highs and three new lows

while the Nasdaq Composite recorded 31 new highs and 79 new

lows.