Stocks experienced a significant decline, with the Dow dropping 748 points, the S&P 500 declining 1.7%, and the Nasdaq declining 2.2%, as investors were alarmed by Trump’s tariffs and subpar economic data.
The United States stock market experienced its most significant single-day decline since December 2024 on Friday, as traders sold risk assets amid concerns regarding stagnant inflation and a weakening economy. Recent economic data revealed a slowdown in business activity, declining home sales, and shaky consumer confidence, all while the White House intensified its tariff war.
By the time the market ended, the Dow Jones Industrial Average had down 748.63 points (1.69%) to 43,428.02. The S&P 500 sank 1.71% to 6,013.13, and the Nasdaq Composite fell 2.2% to 19,524.01.
Traders sold equities as concerns grew over the weekend, when Trump may impose further tariffs after previously threatening (repeatedly) to levy a 25% penalty on autos, electronics, and medicines.
Meanwhile, the University of Michigan’s carefully regarded consumer confidence index declined substantially in February compared to January. The study also revealed that long-term inflation forecasts had reached their highest level since 1995.
The housing market is deteriorating. Existing home sales decreased 4.9% in January, a far steeper decline than projected. Buyers are pulling back, weighed down by sky-high mortgage rates and soaring housing prices.
This was not the only red flag. According to the most recent S&P Global statistics, the US services sector has contracted at the highest rate in more than two years. Business activity is declining, and tariffs are making it worse.
“The positive vibe that existed at the beginning of the year has vanished,” said Chris Williamson, chief business economist at S&P Global. “Uncertainty is increasing, corporate activity is slowing, and inflation is a major concern.”
Big tech suffered as investors abandoned high-growth companies such as Nvidia, Meta, Alphabet, Microsoft, Palantir, and other investor favorites. According to statistics from Google Finance, the risk-off mood drove funds into conservative companies, with Procter & Gamble up 1.8% and General Mills and Kraft Heinz up more than 3%.
Walmart too felt the pain. The stock fell 2.5%, marking the second consecutive day of losses, as the business warned that the consumer outlook is deteriorating.
The S&P 500 fell 1.7% this week, while the Dow and Nasdaq fell 2.5% each. The sell-off was followed by a surge in Treasury notes, as investors sought the relative safety of government debt, and it occurred after a week of continuous global anxiety.
The Federal Reserve is now the focus. Market bets on interest rate reduction shifted quickly, with traders now expecting a 55% likelihood that the Fed will cut rates twice to three times by the end of 2025, bringing them down to 3.50%-3.75% from the current 4.25%-4.50%. On Thursday, the odds were only 44.4%.
By October, futures predict a 50-50 possibility of a further cut of half to three-quarters of a percentage point—a significant shift from the previous day, when the probability was only 38%.
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