U.S. stock markets closed sharply lower on Friday, weighed down by hotter-than-expected inflation data and renewed concerns over tariff policies under President Donald Trump. The Dow Jones Industrial Average dropped 590 points, or 1.6%, while the S&P 500 lost 1.6% and the Nasdaq Composite fell 2.2%, extending a week of volatility for Wall Street. The latest data from the Bureau of Economic Analysis revealed that the core Personal Consumption Expenditures (PCE) price index considered the Federal Reserve’s preferred measure of inflation rose 0.4% in February, surpassing economist forecasts of 0.3%.
On an annual basis, the index climbed to 2.8%, slightly above the projected 2.7%. This increase suggests that inflationary pressures remain persistent, complicating expectations for a near-term shift in monetary policy. Dan Siluk, portfolio manager at Janus Henderson, noted that while headline inflation was in line with estimates, the core numbers were “notably resilient,” pointing to possible delays in any anticipated interest rate adjustments by the Fed. Consumer spending for the month rose by 0.4%, just shy of the 0.5% forecast, while sentiment data from the University of Michigan showed consumer confidence slipping, falling short of expectations.
Adding to investor unease, President Trump announced a 25% tariff on all imported automobiles and car parts, effective April 3 and May 3 respectively. The move has sparked fears of a trade war escalation with major partners, particularly the European Union, which is reportedly assessing potential concessions to avoid reciprocal tariffs. Trump’s actions have already sent ripples through the auto sector and broader market, with investors concerned about rising costs and slowed economic activity. The broader market downturn reflects growing apprehension about both inflation and geopolitical trade risks.
Consumer sentiment falls short as inflation concerns persist
The Russell 2000 index of small-cap stocks dropped 1.7%, and the Cboe Volatility Index (VIX) surged 10%, reflecting heightened market anxiety. The 10-year U.S. Treasury yield fell to 4.27% as investors moved into safer assets, while crude oil prices dipped to around $69.30 per barrel. In corporate developments, CoreWeave, an artificial intelligence infrastructure firm backed by Nvidia, debuted on the Nasdaq at $40 per share below its targeted range. Nvidia, which owns 6% of CoreWeave, saw its own stock fall 1.3%, while major client Microsoft slipped 1.8%.
Meanwhile, Lululemon Athletica shares plunged nearly 15% despite posting strong earnings, as its profit outlook disappointed investors. With the S&P 500 now on track for its first negative quarter since 2023 and analysts at firms including UBS, Barclays, and Goldman Sachs lowering their year-end targets, market sentiment appears increasingly cautious. Amid this backdrop, gold futures surged to a record $3,100, with forecasts from Goldman Sachs suggesting further gains as investors seek safe-haven assets during a time of economic and geopolitical uncertainty. – By MENA Newswire News Desk.