US stocks took another hit on Friday as investors reacted to fresh inflation data and escalating trade tensions. The Dow Jones Industrial Average (DJI) shed over 700 points, dropping 1.6%, while the S&P 500 (GSPC) declined 2%. The Nasdaq Composite (IXIC) led the losses with a steep 2.7% fall, as tech stocks bore the brunt of the sell-off.
The latest reading from the Personal Consumption Expenditures (PCE) index— the Federal Reserve’s preferred measure of inflation—showed higher-than-expected price increases, stoking fears that inflation remains stubbornly above the Fed’s 2% target. Meanwhile, consumer sentiment plunged to its lowest level since November 2022, adding to market anxieties.
Market Movers:
- Amazon (AMZN), Tesla (TSLA), and Alphabet (GOOGL) – Big Tech stocks fell sharply, with Amazon down over 4% and Tesla dropping more than 3%. Concerns over consumer sentiment and persistent inflation drove a broader sell-off in high-growth stocks.
- Lululemon (LULU) – Shares of the athleisure giant plummeted 15% after CEO Calvin McDonald warned of a more "cautious consumer" amid macroeconomic uncertainties. Slower foot traffic and spending concerns weighed on the stock.
- CoreWeave (CRWV) – The AI cloud computing provider saw volatile trading in its market debut. Initially falling over 5%, the stock rebounded slightly, reflecting investor uncertainty around the sustainability of the AI-driven rally.
- Bitcoin (BTC-USD) – The cryptocurrency dropped over 4%, dipping below $84,000 as investors moved away from risk assets. Inflation concerns and expectations of upcoming retaliatory tariffs from the Trump administration fueled the downturn.
Tech Sell-Off Accelerates as Tariff Worries Deepen
Technology and consumer discretionary stocks led the market rout as investors braced for the potential economic fallout from President Trump's trade war escalation. Earlier this week, Trump announced a 25% tariff on foreign-made automobiles, sparking fears of retaliatory measures. The Nasdaq’s steep decline reflected investor anxiety about the broader impact on global supply chains and corporate earnings.
Fed Chair Jerome Powell has reassured markets that inflationary pressures may be "transitory," but with recent data showing inflation sticking above target levels, traders are growing skeptical. The Federal Reserve Bank of Atlanta now projects a 2.8% contraction in GDP for Q1, adding to concerns about slowing economic growth.
Consumer Sentiment Hits Multi-Year Low
The University of Michigan’s consumer sentiment index dropped to 57 in March, its lowest reading since late 2022. The sharp decline underscores rising concerns among consumers about inflation and labor market stability. Retailers like Lululemon have already reported weaker demand, with executives citing economic uncertainty as a major factor in slowing foot traffic.
Looking Ahead
Investors now turn their attention to key developments in the coming weeks. The Federal Reserve’s next policy meeting will be closely scrutinized for any shifts in interest rate strategy in response to persistent inflation. Meanwhile, April 2 looms large as markets await potential retaliatory tariffs from the Trump administration, which could further roil equity markets.
With economic data pointing to slower growth and trade uncertainties lingering, volatility is likely to remain a dominant theme for Wall Street in the near term. Traders will be watching closely for any signals from policymakers that could either calm or further agitate the market’s already fragile sentiment.
