Wall Street ended the week on a sharp downturn as renewed inflation concerns and mounting trade tensions sent investors fleeing from high-growth stocks. The S&P 500 dropped 1.97% to 5,580.94, while the Nasdaq tumbled 2.70% to 17,322.99. The Dow Jones Industrial Average declined 1.69% to 41,583.90, as major indexes extended their recent slide.
Fresh data from the U.S. Commerce Department showed that consumer spending rebounded less than expected in February, while a key measure of inflation recorded its largest monthly gain in over a year. Additionally, a University of Michigan survey indicated that inflation expectations surged to their highest level in nearly 2.5 years, deepening concerns about persistent price pressures.
Investors are increasingly wary that President Donald Trump’s proposed 25% tariffs on auto imports, set to take effect next week, could stoke inflationary pressures and disrupt global supply chains.
Tech Stocks Lead Market Selloff
High-growth technology stocks bore the brunt of the downturn, with Apple (NASDAQ: AAPL) sliding 2.7%, Microsoft (NASDAQ: MSFT) dropping 3%, and Amazon (NASDAQ: AMZN) shedding 4.3%. The declines erased billions in market value and dragged the broader market lower.
“The inflation impact of tariffs has yet to fully appear in the data, but we expect that to change soon,” said Greg Bassuk, CEO of AXS Investments. “This could be the calm before the storm.”
Other key market developments:
- Ten of the 11 S&P 500 sectors ended lower, led by a 3.81% drop in communication services and a 3.27% loss in consumer discretionary stocks.
- An index tracking U.S. banks fell 2.3%, reflecting concerns over economic uncertainty.
- The CBOE Volatility Index (VIX) spiked nearly 3 points, reaching a one-week high.
Meanwhile, Lululemon Athletica (NASDAQ: LULU) plunged 14% after slashing its annual forecast, citing uncertainty around tariffs.
Investors Eye Fed Policy Amid Rate Cut Bets
The latest economic reports have clouded expectations for Federal Reserve policy. Interest rate futures indicate a 76% probability of a 25-basis-point rate cut by June, according to the CME FedWatch tool. However, persistent inflation could complicate the central bank’s decision-making process.
Amid trade war concerns, gold prices surged, lifting miners like Harmony Gold (JO: HARJ) and Gold Fields (NYSE: GFI) by 9.5% and 4.5%, respectively.
For the week:
- The S&P 500 fell 1.5%
- The Nasdaq lost 2.6%
- The Dow declined 1%
With Trump set to unveil a fresh round of tariffs on April 2, investors remain on edge, bracing for potential market volatility in the weeks ahead.