Stocks fell sharply on Friday, closing the week in the red, as a combination of concerns about inflation and potential tariff increases caused market anxiety.
The Dow Jones Industrial Average dropped 444.23 points, or 0.99%, ending at 44,303.40. The S&P 500 fell by 0.95%, closing at 6,025.99, while the Nasdaq Composite slid 1.36%, finishing at 19,523.40. These losses left all major indices in negative territory for the week.
Trump’s Tariff Announcement Sparks Market Reaction
The market downturn intensified after President Donald Trump revealed plans to impose reciprocal tariffs on trade partners, which could increase tariffs across the board to match those imposed by other countries on the U.S.
During a meeting with Japan’s Prime Minister Shigeru Ishiba, Trump stated, “I’ll be announcing that next week [on] reciprocal trade, so that we’re treated evenly with other countries. We’ll have a news conference, and we’ll lay it out pretty simple.” His comments heightened investor uncertainty, contributing to the sell-off.
Economic Data Fuels Inflation Fears
Even before Trump’s remarks, traders were already on edge. Early data from consumer sentiment and jobs reports pointed to rising inflation concerns. The 10-year Treasury yield surged above 4.5% during the session, further exacerbating investor anxiety.
The University of Michigan’s preliminary consumer sentiment index for February dropped to 67.8, well below the expected 71.3. The report also revealed that respondents expect the one-year inflation rate to reach 4.3%, a significant rise from 3.3% last month and the highest level since November 2023.
Additionally, the January jobs report showed a decline in the unemployment rate to 4%, down from 4.1%. However, average hourly earnings surpassed expectations, adding to concerns about rising inflationary pressures.
Amazon and Alphabet See Losses
Amazon stock lost 4% after the company’s first-quarter revenue guidance disappointed investors, predicting the weakest growth on record—between 5% and 9%. This outlook overshadowed its fourth-quarter earnings beat. Alphabet also continued to slide following disappointing results earlier in the week.
Sam Stovall, Chief Investment Strategist at CFRA Research, commented, “We’ve just had some disappointments in the traditionally non-disappointing tech or ‘Magnificent Seven’ areas, and so I think we’re seeing some rotation away from those groups. I don’t think that we’re heading for a bear market but rather just probably heading for some volatility and short-term disappointment.”
A Volatile Week for the Markets
This week has seen significant market swings. Stocks fell sharply on Monday after Trump announced a 10% tariff on China. He also proposed, but later paused, a 25% tariff on Canada and Mexico. The S&P 500 rebounded for three days following the tariff relief but ended the week on a negative note.
Correction: An earlier version incorrectly stated the session high for the 10-year Treasury yield.
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