1. Atlanta Fed predicts Q1 GDP contraction of 2.4%, up from -2.8%. 2. Commerce Secretary Lutnick expresses disbelief over GDP contraction estimates. 3. Lutnick claims optimism for future quarters due to regulatory cuts. 4. Falling prices in food and energy are cited as positive indicators. 5. The Bureau of Economic Analysis will release the official GDP estimate on April 30.
A GDP contraction typically signals economic weakness, negatively impacting stock market performance, reflexively affecting the S&P 500. Historical contractions have led to declines in major indices as investor sentiment turns sour during similar forecasts.
A contraction in GDP has a direct relationship with market confidence and can prompt corrective behavior in the S&P 500, influencing a broad range of sectors and sentiment in the stock market.
The immediate reaction in the stock market tends to correlate with GDP forecasts, potentially causing investors to pull back until more conclusive evidence appears.