Stocks fell Friday as consumer sentiment fell to a 15-month low, and weaker-than-expected economic statistics indicated that President Trump’s policies could affect U.S. company activity.
According to financial data firm FactSet, Friday’s 1.7% falls in the S&P 500 and the Dow Jones Industrial Average were the most significant one-day drops since December 18. The Nasdaq composite index, heavily reliant on tech, fell 2.2%.
U.S. corporate activity is approaching stall speed, according to a preliminary assessment from S&P Global, with growth slowing to a 17-month low. Concerns about Trump administration plans, such as the possibility of new tariffs and domestic spending cutbacks, caused activity for U.S. services industries to decline unexpectedly, and many of the businesses surveyed indicated a decline in optimism.
According to Chris Williamson, chief business economist at S&P Global Market Intelligence, businesses express broad concerns about the effects of federal government actions, which range from tariffs and expenditure cutbacks to geopolitical developments. Uncertainty brought on by the shifting political climate reportedly hurts sales, while supplier price increases linked to tariffs drive up costs.
Concerns about inflation also affected the stock market; according to a University of Michigan study, people are bracing for increased inflation due to possible tariffs. Tariffs are levies paid by importers, like Walmart and other merchants, and as a result, the costs are frequently passed on to customers, increasing prices.
In contrast to last month’s prediction of 3.3% inflation, consumers generally anticipate prices to increase by 4.3% in the next 12 months, according to a University of Michigan study. Although a separation is seen beneath the surface, that is consistent with the preliminary findings the study previously showed. Inflation expectations are somewhat down for Republicans and increasing for Democrats and political independents.
In contrast, a third economic report stated that last month’s sales of previously inhabited residences were lower than analysts had predicted. Relatively high mortgage rates have negatively impacted the housing market.
The latest earnings report from Walmart is one of the corporate reports that has contributed to the uneasiness on Wall Street. The retail behemoth warned of additional difficulties in an uncertain economic environment as it released a 2025 sales and profit estimate below analysts’ expectations on Thursday.
After falling 6.5% the day before, Walmart’s stock fell 2.5% on Friday. Gina Bolvin, president of Bolvin Wealth Management Group, wrote in an email that we could have the impetus for a good correction because of policy uncertainty and Walmart’s worse retail sales outlook yesterday, a harbinger for consumer spending.
The S&P 500 saw the most significant decline in Akamai Technologies, even though the cloud computing and cybersecurity firm posted higher profits than experts had anticipated. It dropped 20.6% and lost a fifth of its worth when investors turned their attention to its sales and other financial projections for the next year, which did not meet analyst expectations.
Approximately four of every five equities in the S&P 500 index declined, even among the large corporations. Everything collapsed, including metals firms, airlines, and Big Tech stocks pushed up in the craze for artificial intelligence. Nvidia had a 2.5% decline. Newmont Mining saw a 4.4% decline, and United Airlines saw a 5.5% decline.
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, the combined data from Friday raise questions about the economy’s remarkable resilience, and the resulting losses on Wall Street were extensive.
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 mitigated concerns about rising inflation, which may hinder the Federal Reserve’s ability to reduce interest rates and provide more economic and financial market relief.
