Why Amazon, Meta Platforms, and Alphabet Slumped on Wednesday

Danny Vena, The Motley Fool

Wed, Apr 30, 2025, 1:38 PM 5 min read

• The latest read on GDP showed the U.S. economy retreated in the first quarter -- the first time this has happened since 2022.

• Economists had expected modest growth, but tariffs and trade disruption threw a wrench into the works.

• The resulting uncertainty sent investors to the sidelines, but the data may be misleading.

The U.S. economy has run consistently higher over the past couple of years. However, recent concerns about tariffs, the burgeoning trade war with China, and the impact of the broader uncertainty on the economy have fueled significant stock market volatility.

Investors have been watching economic reports closely for signs of resilience. A key indicator was released Wednesday, providing some insight. Unfortunately, the news wasn't what investors were hoping for.

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With that as a backdrop, many of the so-called "Magnificent Seven" stocks --which have helped fuel the bull market over the past few years -- fell in unison. Amazon (NASDAQ: AMZN) tumbled 3.6%, Meta Platforms (NASDAQ: META) slumped 2.9%, and Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOGL) fell 2.4% as of 1:16 p.m. ET on Wednesday.

To be clear, there was very little in the way of company-specific news driving Amazon, Meta Platforms, and Alphabet stocks lower today. This seems to suggest that investors are reacting to the surprisingly weak economic news.

The U.S. Bureau of Economic Analysis released its initial read on the state of the economy, which showed growth in the first quarter was weaker than predicted. The report showed that gross domestic product (GDP) in the first quarter of 2025 decreased at an annual rate of 0.3%. Economists had predicted GDP growth of 0.4%, which already marked a stark contraction compared to the 2.4% expansion in the fourth quarter.

The unexpected news comes at a critical time, as a growing number of economists fear the economy could enter a recession in 2025. Data compiled by the National Association for Business Economics revealed that 40% of economists are predicting a 50% chance of a recession occurring this year.

The most widely used definition of a recession is two successive quarters of declining GDP. If the trajectory of the economy continues along its current course, we could already be in the early days of said recession. There are fears that price increases fueled by rising tariffs could reignite inflation. This, in turn, could result in a pullback in consumer and business spending, providing all the ingredients to fuel a downturn.