The stock market took a hit on Friday as investors grew concerned about inflation and potential tariffs. The Dow Jones Industrial Average fell 444.23 points, or 0.99%, to close at 44,303.40. The S&P 500 declined by 0.95% to 6,025.99, and the Nasdaq Composite dropped 1.36% to end at 19,523.40.
President Trump announced plans for reciprocal tariffs on trading partners, which could result in raising tariff levels across the board to match those charged to the U.S. This news, along with earlier consumer sentiment and jobs data suggesting a rise in inflation, put the stock market on edge. The University of Michigan’s consumer sentiment index showed respondents anticipating the one-year inflation rate to hit 4.3%, the highest level since November 2023. January’s jobs report also showed that the unemployment rate fell to 4% from 4.1%, and average hourly earnings were higher than expected.
Tech giants Amazon and Google also contributed to the market’s decline. Amazon lost 4% after its guidance disappointed investors, while Google continued to fall after somewhat disappointing results earlier in the week.
Inflation and tariff fears hit stocks
We’ve just had some disappointments in the traditionally strong tech sector, and so I think we’re seeing rotation away from those groups,” said Sam Stovall, chief investment strategist at CFRA Research. I don’t think we’re heading for a bear market but rather just some volatility and short-term disappointment.
The week has been volatile overall, with stocks falling on Monday after President Trump announced 10% tariffs on China over the weekend and proposed, then paused, 25% levies on Canada and Mexico. In other news, Bank of America named freight company XPO among its top picks, reiterating its buy rating on the stock.
The bank’s updated price target implies a 15.7% upside from Thursday’s close. Ryan Detrick, a technical analyst at Carson Group, referenced the “Super Bowl Indicator,” suggesting stocks could perform better this year if the Philadelphia Eagles beat the Kansas City Chiefs in this Sunday’s game. However, he cautioned that historical patterns show economic downturns following Philadelphia sports victories.
More ETFs combining bitcoin exposure and derivatives launched this week, as the ecosystem of crypto funds expands under the Trump administration. Fund issuers are now working to introduce strategies, such as buffer funds, covered calls, and leveraged products, to the crypto market.
