The US stock market saw its worst single-day loss since December 2024, as traders dumped risk assets over fears of a weakening economy and persistent inflation.
Economic Uncertainty and Trade War
At market close, the Dow Jones Industrial Average plummeted 748.63 points to 43,428.02. The S&P 500 lost 1.71%, closing at 6,013.13, while the Nasdaq Composite dropped 2.2% to 19,524.01. Investors started offloading stocks, fearing that over the weekend President Trump might impose further tariff measures on automobiles, semiconductors, and pharmaceuticals. Meanwhile, the University of Michigan's consumer confidence index sharply dropped in February, and long-term inflation expectations hit their highest level since 1995. Existing home sales fell dramatically by 4.9% in January.
Impact on Major Companies
Big tech companies like Nvidia, Meta, Alphabet, and Microsoft were hit hard as investors moved out of high-growth names. Walmart also suffered, with its stock dropping 2.5% after a warning of weakening consumer outlook. For the week, the S&P 500 slid 1.7%, while both the Dow and Nasdaq lost 2.5%. The sell-off was accompanied by a move towards Treasury notes, indicating a search for safer investments.
Options and Forecasts
Friday also marked a major options expiration day, leading to huge volumes and price volatility. Nearly 80% of S&P 500 stocks saw a decline. Investors' focus is now on the Federal Reserve, with expectations of multiple interest rate cuts by the end of 2025. Jamie Cox from Harris Financial Group pointed out that markets are waking up to the consumer impact of tariffs. Investors are revising their initial expectations regarding the White House's tariff policy, which is now being seen as more than just negotiating tactics.
Markets face a new reality amid economic uncertainty and ongoing tariff disputes. Investors are now assessing potential impacts on consumers and businesses, reevaluating their strategies in this volatile economic landscape.
