US stocks end mixed as American economy contracts, Trump hints at trade deal with China

By Mucahithan Avcioglu

ISTANBUL (AA) - US stocks had a mixed close midweek after the US economy surprisingly shrank in the first quarter, raising fears of a recession, and Donald Trump hinted at a trade deal with China.

The S&P 500 gained 0.15%, or 8.23 points, to close at 5,569.06. The Dow Jones Industrial Average rose 0.35% to 40,669.36.

On the other hand, the Nasdaq fell 0.09% to 17,446.34.

US gross domestic product (GDP) contracted 0.3% in the first quarter, despite forecasts of a 0.2% rise, according to the Bureau of Economic Analysis.

The contraction was attributed primarily to "an increase in imports, which are a subtraction in the calculation of GDP, and a decrease in government spending."

Trump said Wednesday that contraction in the US economy "has nothing to with tariffs."

“This is Biden’s Stock Market, not Trump’s. I didn’t take over until January 20th. Tariffs will soon start kicking in, and companies are starting to move into the USA in record numbers. Our Country will boom, but we have to get rid of the Biden 'Overhang.'" he wrote on Truth Social.

"This will take a while, has NOTHING TO DO WITH TARIFFS, only that he left us with bad numbers, but when the boom begins, it will be like no other. BE PATIENT!!!" he said.

The president later stated that the Chinese economy is "doing poorly" because America is not buying its products – on the day the US announced its economy contracted 0.3% in the first quarter.

"I know that China is doing poorly right now. I just saw some reports coming out, and I don't want that to happen to China," Trump said in a Cabinet meeting.

The president suggested that Chinese factories are closing in China because the US is refusing their products in the absence of fair-trade practices.

Trump claimed Chinese cargo ships are being forced to turn around in the Pacific Ocean. "They're sending boats, the biggest boats in the world ... and they're turning around in the Pacific Ocean, they're doing a big U-turn and going back because they don't want the goods, because 145% tariff," he said.

Positivity, however, returned to the markets after Trump expressed hope for improved relations with Beijing, despite the tough rhetoric.

"At a certain point, I hope we're going to make a deal with China,” he said.

Trump said he likes Chinese President Xi Jinping and was "saddened to hear" China is in this situation. “I want China to do well. I want every country to do well, but they have to treat us fairly also,” he said.

On the other macroeconomic data side, personal consumption expenditures (PCE) in the US rose 0.7% month-on-month to $134.5 billion in March, above expectations.

The Fed's inflation indicator, core personal consumption index, was also up 2.6% on an annual basis, matching estimates.