As bad economic news piles up, Republicans are laser-focused on tax cuts for their billionaire buddies. Zero focus on inflation, housing costs. https://t.co/CDf6G0jFov
— Martin Heinrich (@SenatorHeinrich) February 22, 2025
The Dow Jones Industrial Average plummeted 748 points, or 1.7%, on Friday as investors grew increasingly concerned about inflation and the potential impact of President Donald Trump’s tariffs on the economy. The broader S&P 500 also sank 1.7%, while the Nasdaq Composite fell 2.2%. This marks the Dow’s second consecutive day of steep losses, with the index falling about 1,200 points over Thursday and Friday.
After today, the S&P 500 is down an annualized 86.1% on Friday. Only 1937 was worse.
We've been talking a lot how weakness on Friday has been the play in 2025. News heavy markets = sell ahead of the weekend.
I'll take it as the good news, as it has to improve. Right? pic.twitter.com/rBy2QWPl4i
— Ryan Detrick, CMT (@RyanDetrick) February 21, 2025
The final reading of the University of Michigan’s consumer sentiment index, released Friday, showed that US consumer sentiment declined in February for the second consecutive month, down by a steep 10% from January. The survey found that Americans are losing confidence in the economy, driven primarily by worries over Trump’s tariffs potentially increasing prices. A new poll released Thursday revealed that nearly two-thirds of US adults, 62%, feel Trump isn’t doing enough to address inflation.
Stocks slump with the S&P 500 wiping out almost all of its gains since Trump took office last month, after a widely watched measure of how consumers feel about the economy showed mounting fears over stubborn inflation. @JARennison https://t.co/c6cwWOXvGO
— Peter Baker (@peterbakernyt) February 21, 2025
Investors grew concerned that weak consumer sentiment could lead to a pullback in Americans’ shopping habits, which is vital since consumer spending constitutes more than two-thirds of the US economy. Although there’s no evidence of an impending recession, economic data has weakened in recent months.
Dow drops as inflation fears spike
Trump economic plan to ruin our economy and bring “stagflation” back from America’s toughest economic recession in the 70’s! Yeah good going Trump, make America broke again! https://t.co/icglkGPq6n via @NYTimes
— John Leguizamo (@JohnLeguizamo) February 21, 2025
Job growth has fallen over the past year as employers wait to see the impact of the Trump administration’s economic policies, particularly tariffs, which could severely dent companies’ bottom lines. Housing continues to slow down, with sales of existing homes falling 4.9% in January from the previous month, while prices shot up to a record high, exacerbating America’s home affordability crisis. Retail sales have also dropped recently, with Walmart indicating its sales and profit growth would slow this year, attributing the slowdown to consumer fears over rising prices and tariffs.
The University of Michigan survey found that the drama surrounding tariffs has affected Americans’ perception of prices, with expectations for inflation in the year ahead surging to 4.3%, the highest level since November 2023. UnitedHealth, a key Dow component, also contributed to the market’s decline, sinking 7% due to a report that the US Department of Justice is investigating the company for its Medicaid billing practices. The company strongly denied the report.
Despite this plunge, stocks remain very close to their all-time highs, with the S&P 500 hitting a record on Wednesday before falling back slightly on Thursday. However, the recent economic data and concerns over inflation and tariffs have investors on edge, wondering if the market’s bull run may be coming to an end.
Image Credits: Photo by Markus Spiske on Unsplash
