U.S. equities sank dramatically Friday as reports indicated consumer and industry concerns over President Donald Trump’s plans affect the US economy. The S&P 500 fell 1.7%, marking its lowest day in two months. The Dow Jones Industrial Average sank 748 points, 1.7%, while the Nasdaq composite fell 2.2%.
The losses escalated throughout the day following multiple weaker-than-expected economic data. According to one report, corporate activity in the United States is on the verge of stopping, with growth dropping to a 17-month low. According to S&P Global’s preliminary assessment, activity for U.S. services industries unexpectedly fell, and many respondents cited declining optimism due to concerns about Washington.
According to Chris Williamson, chief business economist at S&P Global Market Intelligence, companies are more concerned about the impact of federal government policies ranging from expenditure cutbacks to tariffs and geopolitical developments. Sales are hampered by the uncertainty created by the shifting political scene, and prices rise as suppliers raise tariff-related charges.
According to a second survey, US consumers are bracing for increased inflation, partly due to prospective tariffs that might boost costs on a wide range of imported goods. According to a University of Michigan study, their prices will rise 4.3% in the next 12 months, a significant increase from their 3.3% projection last month. That is consistent with the preliminary statistics from the poll earlier this month.
However, a difference exists under the surface among US homes. Inflation expectations are growing among political independents and Democrats but declining somewhat among Republicans.
In contrast, a third economic report stated that last month’s sales of previously inhabited residences were lower than analysts had predicted. Sales have been hampered by both high housing prices and relatively high borrowing rates.
The U.S. stock market is, in fact, still up for the year thus far and not far from the record high it achieved earlier this week. Almost nobody on Wall Street is predicting a recession shortly. However, Friday’s data cast doubt on the economy, which has been extraordinarily resilient, and the losses on Wall Street were extensive.
The smaller businesses’ stocks dropped more than the market as a whole, even though their earnings are often more directly correlated with the health of the US economy than those of their large, international competitors. The Russell 2000 index saw the market-leading 2.9% decline of small companies.
Three of every four equities in the large that comprise the S&P 500 index declined. Everything fell, including metals firms, airlines, and Big Tech stocks pushed up in the craze for artificial intelligence. Nvidia had a 4.1% decline. Newmont Mining lost 5.7%, and United Airlines lost 6.4%.
Despite reporting a higher-than-expected profit for the most recent quarter, cloud computing and cybersecurity firm Akamai Technologies had the worst decline in the S&P 500. As investors turned their attention to its sales and other financial projections for the next year, which fell short of experts’ predictions, it lost a fifth of its worth and plunged 21.7%.
Celsius Holdings, a company that distributes “better-for-you” energy drinks, emerged victorious on Wall Street. After announcing that it had agreed to purchase Alani Nu, a beverage brand that caters to female consumers, it jumped 27.8%. According to analysts who released the company’s most recent quarterly result, the merger could boost Celsius’s profitability soon. The purchase price, $1.65 billion net of tax consequences, was deemed appropriate.
Stocks of businesses that can generate consistent earnings regardless of the state of the US economy were among the other winners. For instance, American Water Works, a water company, increased by 3.1%.
The S&P 500 dropped 104.39 points to 6,013.13 overall. The Nasdaq composite fell 438.36 points to 19,524.01, while the Dow Jones Industrial Average fell 748.63 to 43,428.02.
The S&P 500 had been headed for a week of virtually little change before Friday’s steep decline. A constant stream of better-than-expected earnings announcements has contributed to the rise in equities. This lessened concerns about rising inflation, which may keep the Fed from further lowering interest rates to aid the economy and financial markets.
After drastically lowering its primary interest rate until the end of last year, the Fed has kept it constant. At their most recent policy meeting in January, Fed officials indicated that they may put the policy on hold for some time due to concerns about how Trump’s proposed tariffs and mass deportations of migrants, among other things, could drive up inflation.
Lower interest rates can stimulate the economy but also lead to spending, which raises inflation.
Treasury rates dropped after Friday’s less-than-expected GDP data in the bond market. Thursday, the yield on the 10-year Treasury fell from 4.51% to 4.42 %. After increasing in most of Asia, indices in foreign stock markets were mixed in Europe.
One of the most significant global changes was that the Hong Kong Stock Exchangesoaredr 4%, driven by a spike in Alibaba. This e-commerce company announced higher-than-expected profits at the end of the previous year. It also boasted about its advancements in artificial intelligence.
