US stock markets fell sharply Friday after an economic report showed American consumers are growing increasingly fearful of price increases and how President Donald Trump’s tariffs could reignite the inflation crisis. The Dow Jones Industrial Average fell 748 points, or 1.7%. The broader S&P 500 sank 1.7%, and the Nasdaq was 2.2% lower.
The Dow tumbled for the second consecutive day, falling about 1,200 points on Thursday and Friday.
Stocks To Watch | 📊Ready, set, trade! Keep an eye on these stocks as they set the market abuzz
#StockMarket pic.twitter.com/ZiJ6uGwQS4
— ET NOW (@ETNOWlive) February 27, 2025
The report released Friday showed that US consumer sentiment declined in February for the second consecutive month, down by a steep 10% from January. That was double the decline initially reported earlier this month.
Global Markets | Here's a look at how the global equities performed overnight📈 #NASDAQ #DowJones #FTSE #CAC #DAX pic.twitter.com/mP9aLtQQG5
— ET NOW (@ETNOWlive) February 27, 2025
The survey found that Americans are losing confidence in the economy, driven primarily by worries over Trump’s tariffs potentially jacking up prices. A new poll released Thursday showed that nearly two-thirds of US adults, 62%, feel Trump isn’t doing enough to address inflation.
Defensive trades gaining steam with Cons Staples leading today and Health Care maintaining lead YTD … NASDAQ down most today and down by 3.1% MTD; Russell 2000 Growth down most MTD pic.twitter.com/daCiGoHntX
— Liz Ann Sonders (@LizAnnSonders) February 25, 2025
Consumer fears drag markets down
The Michigan survey showed that Americans now fear higher inflation on the horizon. Investors grew fearful that weak consumer sentiment could lead to a pullback in Americans’ shopping habits, which comprise more than two-thirds of the US economy. Although economic data has weakened in recent months, indicating no evidence that a recession is on the horizon, job growth has fallen off over the past year as employers await clarity on the Trump administration’s economic policy, particularly around tariffs.
Housing continues to slow down: a National Association of Realtors report Friday showed that sales of existing homes fell 4.9% in January from the previous month, while prices shot up to a record high for the month, exacerbating America’s home affordability crisis. Retail sales have also dropped recently. UnitedHealth, a key Dow component, sank 7% on a report that the US Department of Justice is investigating the company for its Medicaid billing practices.
The company strongly denied the report. Despite the plunge, stocks are very close to their all-time highs. The S&P 500 hit a record on Wednesday before falling back slightly on Thursday.
Image Credits: Photo by Ishant Mishra on Unsplash
