The last reading on GDP showed that the North -American economy retired in the first quarter, the first time it has happened since 2022.
Economists had expected modest growth, but trade rates and trade launched a key to the works.
The resulting uncertainty sent the investors to the margin, but the data may be misleading.
The North -American economy has had a constant increase over the last two years. However, the recent concerns about rates, the expanding trade with China and the impact of the broadest uncertainty on the economy have fueled significant volatility in the stock market.
Investors have been closely observing economic reports for resilience signs. A key indicator was published on Wednesday, providing information. Unfortunately, the news was not what investors expected.
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With this as a backdrop, many of the so -called “Magnificent seven “stocks” -They have helped to feed the ox market in recent years, it has fallen in unison. Amazon(Nasdaq: Amzn) dropped by 3.6%, Meta Platforms(NASDAQ: Meta) fell 2.9%and Alphabet(NASDAQ: Googl)(NASDAQ: Googl) It fell 2.4% from 13:16 et on Wednesday.
To be clear, today there was very little way that the specific news of the company Condunsssin Amazon, Meta Platforms and Alphabet Stocks today. This seems to suggest that investors react to surprisingly weak economic news.
Image Source: Getty’s pictures.
The United States Economic Analysis Office published its initial reading on the state of the economy, which showed that the growth of the first quarter was weaker than expected. The report showed that gross domestic product (GDP) in the first quarter of 2025 decrease to an annual rate of 0.3%. Economists had planned a GDP of 0.4%, which already marked a strong contraction compared to the expansion of 2.4% in the fourth quarter.
The unexpected news comes at a critical moment, as an increasing number of economists fear that the economy could enter a recession in 2025. The data collected by the National Business Economy Association revealed that 40% of economists provide for 50% chance that a recession will occur this year.
The most commonly used definition of A recession It is two successive quarters of the decline GDP. If the trajectory of the economy continues throughout its current course, we could already be in the first days of the recession. There are fears that price increases fueled by increasing rates may reign inflation. In turn, this could lead to an expense of consumer and business spending, providing all the ingredients to feed a fall.
The report contained a silver coating, however. The lowest GDP of the first quarter was fueled by an increase in imports, as companies sought to place it ahead of President Trump’s blanket rates. This may seem counterintuitive, as GDP measures the national production of companies in the United States to reach this number, however, the Government calculates the total amount of goods and services sold in the country, and then backs imports.
These calculations are based on the estimates of inventories, which are far from perfect. Therefore, the results were probably reduced by the increase in imports ahead of the planned rates. Investors will want to monitor the data review that is published at the end of May, as this report will contain more complete information, which could move the data in one way or another.
We will not know for sure if the economy has entered the recession territory until the GDP figures in the second quarter are released at the end of July. In addition, the officer Economists from the National Economic Research Office, a non -profit research organization, which is not a profit in charge of monitoring economic activity. The Office Business Cycles Committee, the official score of a recession, adopts a holistic approach and considers a wide range of economic indicators, including real personal income, industrial production, retail sales and non -agricultural payrolls, before declaring a recession. This usually occurs after the recession is completed.
What does this have to do with our three magnificent seven games?
Alphabet, Meta Platforms and Amazon are the largest digital advertising suppliers in the world. It is well documented that, in the event of a fall, companies mark the return expense and one of the first articles in the budget to be reduced is advertising, which directly affects our trio.
A decline in consumer spending would hurt digital detail sales on Amazon’s e -commerce platform.
Economic uncertainty will undoubtedly cause companies to preserve beautiful capital, which could stop the adoption of artificial intelligence (AI) and tooth cloud spending. As two of the three large cloud infrastructure suppliers, Amazon Web Services and Google Cloud could be successful.
Although this may be a bit disturbing, most economic falls are generally short. In addition, the deposits on the stock market have been historically excellent for long -term investors to collect quality companies at discount prices.
Currently, Amazon, Meta Platforms and Alphabet are sold 29 times, 22 times and 16 times forward. These are multiple attractions, especially when each company is considered to have a long execution history.
For investors with appropriate long -term perspectives, the purchase of shares of industry leading companies represents the potential to generate significant benefits for the next three to five years, regardless of what happens in the coming months.
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John Mackey, a former CEO of Whole Foods Market, a Amazon subsidiary, is a member of the Board of Directors of the Motley Fool. Suzanne Frey, an Alphabet executive, is a member of the Board of Directors of the Motley Fool. Randi Zuckerberg, a former Facebook Development Director and Spokesman for Facebook and Sister to Meta Platforms, CEO Mark Zuckerberg, is a member of the Board of Directors of the Motley Fool. Danny vein It has positions on Alphabet, Amazon and Meta platforms. The Motley Fool has positions and recommends Alphabet, Amazon and Meta platforms. The mold’s fool has a Outreach policy.
