Financial Markets                      04/30 15:31

   

   NEW YORK (AP) -- U.S. stocks bounced back from steep early losses to end 
mixed, continuing their wild swings amid uncertainty about what President 
Donald Trump's trade war will do to the economy. The S&P 500 rose 0.1% 
Wednesday, extending its winning streak to a seventh day. The Dow Jones 
Industrial Average rose 0.3%, and the Nasdaq composite slipped 0.1%. Indexes 
started the day lower after a report suggested the U.S. economy may have shrunk 
at the start of the year, before most of Trump's announced tariffs could take 
effect. The S&P 500 had been down as much as 2.3%. Treasury yields fell.

   THIS IS A BREAKING NEWS UPDATE. AP's earlier story follows below.

   NEW YORK (AP) -- U.S. stocks sank Wednesday after a report suggested the 
U.S. economy may have shrunk at the start of the year, before most of President 
Donald Trump's announced tariffs could take effect.

   The S&P 500 was down 0.8% in late trading and on track to break a six-day 
winning streak. The Dow Jones Industrial Average was down 223 points, or 0.6%, 
with an hour remaining in trading, and the Nasdaq composite was 1% lower.

   The stock market had been heading for much worse losses earlier in the 
morning, when the S&P 500 was down as much as 2.3% and the Dow dropped 780 
points. They initially tumbled after the report on the U.S. economy fell well 
short of economists' expectations, a sharp turnaround from the economy's solid 
growth at the end of last year.

   Importers rushed to bring products into the country before tariffs could 
raise their prices, which helped drag on the country's overall gross domestic 
product.

   Such data raises the threat of a worst-case scenario called "stagflation," 
one where the economy stagnates yet inflation remains high. Economists fear it 
because the Federal Reserve has no good tools to fix both problems at the same 
time. If the Fed were to try to help one by adjusting interest rates, it would 
likely make the other problem worse.

   "Even if today's weak GDP may have partially reflected companies trying to 
get ahead of tariffs, it was still a stagflation warning shot over the bow of 
the economy," according to Ellen Zentner, chief economic strategist for Morgan 
Stanley Wealth Management.

   Financial markets got some better news later in the morning when a report 
said the measure of inflation that the Fed likes to use slowed in March. 
Inflation decelerated to 2.3%, closer to the Fed's goal of 2%, from February's 
reading of 2.7%. Stocks more than halved their losses following the report.

   Still, much of Wednesday's economic data raised concerns about a weakening 
economy. A separate report on the job market from ADP suggested employers 
outside the government may have hired far fewer workers in April than 
economists expected, less than half.

   It's discouraging because a relatively solid job market has been one of the 
linchpins keeping the U.S. economy stable. A more comprehensive report on the 
job market from the U.S. government will arrive on Friday.

   Wednesday's reports add to worries that Trump's trade war may drag the U.S. 
economy into a recession. The president's on-again-off-again rollout of tariffs 
has created deep uncertainty about what's to come, which could cause damage by 
itself.

   "I'm not taking a credit or discredit for the stock market," Trump said 
Wednesday. "I'm just saying we inherited a mess."

   Uncertainty around Trump's tariffs has already triggered historic swings for 
financial markets, from stocks to bonds to the value of the U.S. dollar, that 
battered investors through April. The S&P 500 at one point dropped nearly 20% 
below its all-time high set earlier this year, with scary headlines at one 
point warning of the worst April since the Great Depression.

   But the uncertainty has been two-sided, and hopes that Trump may relent on 
some of his tariffs and reach trade deals with other countries helped the S&P 
500 claw back a chunk of its losses. It's set to finish April with a loss of 
less than 2%, which would be milder than March's, and it's roughly 10% below 
its record.

   Stronger-than-expected profit reports from big U.S. companies have helped 
support the market, and Seagate Technology jumped 9% for one of Wednesday's 
biggest gains after the maker of data storage joined the parade.

   But potentially discouraging trends within the artificial-intelligence 
industry helped offset such gains for storage makers. AI stocks have been 
pulling back sharply on worries that their prices shot too high in prior years, 
when a frenzy around the industry drove them to breathtaking heights.

   Super Micro Computer warned that some customers delayed purchases in the 
latest quarter, which caused the maker of servers used in AI and other 
computing to slash its forecast for sales and profit. Its stock tumbled 14.3% 
for the largest loss in the S&P 500.

   Other AI-related stocks also fell, including a 1.3% drop for Nvidia. Because 
the chip company is so huge in size, its loss was one of the single heaviest 
weights on the S&P 500.

   Starbucks sank 6.9% after the coffee chain fell short of analysts' forecasts 
for revenue and profit in the latest quarter. Starbucks did log its first 
quarterly sales increase in more than a year, but acknowledged that its 
turnaround effort is far from complete.

   Wednesday is set to mark the close of a third straight losing month for the 
S&P 500. Stocks in the energy industry took some of the hardest hits, dropping 
over three times more than any of the other 11 sectors that make up the index.

   Halliburton, an oil services company, lost more than 22% in April as the 
price of crude slid on worries that tariffs will weaken the global economy.

   In the bond market, Treasury yields held relatively steady Wednesday. The 
yield on the 10-year Treasury eased to 4.17% from 4.19% late Tuesday.

   Yields have largely been sinking since an unsettling, unusual spurt higher 
earlier this month rattled both Wall Street and the U.S. government. That rise 
had suggested investors worldwide may have been losing faith in the U.S. bond 
market's reputation as a safe place to park cash.

   In stock markets abroad, indexes finished mixed across Europe and Asia.

   ___

   AP Business Writers Matt Ott and Elaine Kurtenbach contributed.

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