The US stock market tumbled on Friday as investors grappled with President Trump’s tariff plans and signs of rising inflation. The Dow Jones Industrial Average dropped more than 700 points, or nearly 1.7%, while the S&P 500 fell almost 2%. The Nasdaq Composite dropped 2.7%, with tech stocks leading the decline.
The sell-off followed the release of a hotter-than-expected Personal Consumption Expenditures (PCE) index reading, which includes the Federal Reserve’s preferred inflation gauge. The core PCE reading rose 0.4% month over month and 2.8% year over year, continuing to challenge the Fed’s 2% inflation target. US consumer sentiment in March also plummeted.
The latest reading from the University of Michigan came in at 57, down from 64.7 in the prior month, as consumers worried about inflation and broader economic conditions, particularly in the labor market. President Trump confirmed he would “absolutely” follow through with levies against Canada despite having a “very good talk” with Canadian Prime Minister Mark Carney. Stocks experienced turbulence throughout the week over hopes and concerns regarding Trump’s tariff plans, with new duties on auto imports exacerbating fears.
April 2, when broad reciprocal tariffs are set to take effect, is looming large.
Market tumbles amid rising inflation fears
Fed officials have been trying to project stability amid the new tariffs, though escalating trade tensions have overshadowed Fed Chair Jerome Powell’s reassurances.
One policymaker described the situation as having “zero visibility” in a “dense fog.”
Tech and Consumer Discretionary stocks led the market sell-off on Friday. Notable declines included Amazon, Tesla, and Google’s parent company, Alphabet. The 10-year bond yield also decreased to 4.25%, its lowest level since January, as investors shifted to Treasurys.
Bitcoin tumbled more than 4% to sink below $84,000 on Friday as investors moved away from risk assets amid inflation and tariff worries. UBS has revised its S&P 500 forecast lower for 2025, with David Lefkowitz, head of US equities, predicting weaker-than-expected earnings. The firm trimmed its year-end price target for the S&P 500 to 6,400 from 6,600.
Gold futures rose to a fresh record on Friday, surpassing $3,115 as tariff threats and inflation concerns drove investors to safe-haven assets. The yellow metal has gained more than 17% over the past quarter. As the stock market fell, the “Magnificent Seven” stocks, which include major tech names, took significant hits.
Investors look ahead to further developments in the ongoing trade tensions and inflationary pressures.
Photo by Caleb Fisher on Unsplash
