Wall Street’s primary indexes fell sharply on Friday, as data underscored underlying price pressures, stoking fears that the Trump administration’s tariff maneuvers could further exacerbate inflationary trends.
In afternoon trading, the Dow Jones Industrial Average slumped 735 points, or 1.7%, to 41,564. The S&P 500 lost 1.9%, and the Nasdaq slid 450 points, or 2.6%.
A Commerce Department report showed the Personal Consumption Expenditures Price index rose in line with what economists polled by Reuters were expecting.
However, excluding volatile items such as food and energy, the index rose more than expected on an annual basis in the previous month, while consumer spending rebounded after falling in January.
Adding to the unease, final figures released by the University of Michigan showed consumer sentiment deteriorated further in March.
Equities have endured pronounced downturns over the past month, fueled by apprehensions that President Trump’s policies could usher the economy into an era of elevated inflation and sluggish growth, potentially casting a shadow over the Federal Reserve’s monetary policy path.
“This data further lends credence to the marginal shift we’re seeing towards a more stagflationary environment,” said Jordan Rizzuto, chief investment officer at GammaRoad Capital Partners.
“If inflation is picking up or running hotter coming into a period before we’ve actually seen the impact from tariffs, that’s rather concerning.”
Markets continue to anticipate that the central bank will reduce borrowing costs by 25 basis points for the first time this year in July, as per data gathered by LSEG.
Rate-sensitive banking giants such as Citi and Wells Fargo each slipped 0.5%.
Trump’s unwavering commitment to a 25% tariff on auto imports, slated to commence next week, has reverberated through global markets, drawing criticism from lawmakers and industry leaders worldwide.
Auto stocks absorbed the impact of the previous session’s selloff. General Motors slid 0.7%, while Ford inched down 0.8%.
All eyes are now on a fresh wave of tariffs the US plans to unveil on April 2, with Trump hinting that these measures might deviate from the straightforward tit-for-tat levies previously promised.
In parallel, a report suggested that the European Union is contemplating concessions for Trump following the enactment of reciprocal tariffs.
The unpredictability surrounding tariffs has compelled companies to revise their annual forecasts downward, with Lululemon Athletica being the latest to adjust. Shares of the sportswear maker plunged 11.3%, dragging down the consumer discretionary sector .
Gold miners Harmony Gold and Gold Fields were up over 6% each, tracking higher gold prices.
The S&P 500 is confronting its first quarterly decline in six quarters, while the tech-heavy Nasdaq prepares for its most substantial quarterly drop in nearly two years.
Investors will also parse through speeches by Federal Reserve policymakers Michael Barr and Raphael Bostic later in the day.
Wolfspeed’s shares slumped about 48%, hitting their lowest since 1998, a day after the chipmaker appointed a new CEO amid its struggles to improve its financial position.
