US Economy Contracts in Q1 Amid Tariff Concerns, Markets React

The US economy shrank at an annualized rate of 0.3% in the first quarter of 2024, marking its first quarterly contraction since 2022. The decline defied analyst expectations of 0.4% growth, triggering a flight to safety that lifted Treasury yields and gold while pressuring equities.

Risk assets faced additional headwinds as the S&P 500 recorded its worst 100-day performance (-7.3%) under a new presidency since Nixon’s second term. The tech-heavy Nasdaq fared worse, plunging 11% for its steepest such decline since George W. Bush’s first term.

The growth setback coincides with escalating trade tensions, as policymakers weigh new tariff measures that could further disrupt supply chains. market participants are recalibrating portfolios ahead of key inflation data and Fed meetings that may determine the trajectory of monetary policy.