Dow closes more than 700 points lower and the S&P 500 is on track for its worst quarter since 2022
By John Towfighi, CNN
New York (CNN) — US stocks plunged Friday and a broad selloff gripped Wall Street as investors digested slightly stubborn inflation data and weakening consumer sentiment while wrestling with continued tariff anxiety.
The Dow tumbled and closed lower by 716 points, or 1.7%. The broader S&P 500 fell 1.97% and the Nasdaq Composite slid 2.7%. The slide on Friday put all three major indexes in the red for this week.
The S&P 500 is down more than 5% this year. The benchmark index is on track for its first losing quarter since September 2023 and its worst quarter since September 2022.
US stocks opened the day lower and began to slide as data from the Commerce Department showed inflation in February remained slightly sticky.
The Personal Consumption Expenditures index rose 2.5% year-over-year in February, unchanged from January and matching expectations. Yet the core PCE index, which strips out volatile categories like food and energy, ticked up to 2.8% year-over-year from 2.7% in January. That hotter-than-expected rise signals that inflation, while broadly cooling, remains above the Fed’s target of 2%.
Meanwhile, consumer sentiment tanked 12% this month, according to the University of Michigan’s latest survey released Friday.
The selloff gradually turned into a rout as investors dumped stocks in industries including technology, autos and airlines. Google (GOOG) slid 4.9%, Stellantis (STLA) slid 4% and Delta Air Lines (DAL) slid 5%.
Lululemon (LULU) stock tumbled 14% on Friday after the company flagged concerns about the outlook for consumer spending on a call with investors.
“We also believe the dynamic macro environment has contributed to a more cautious consumer,” said Calvin McDonald, chief executive at Lululemon.
The selloff in major names wasn’t the only concern for investors. CoreWeave (CRWV), an AI venture backed by chip giant Nvidia (NVDA), had a disappointing debut on the Nasdaq Friday, offering a bleak outlook for both the prospects of a continued AI boom and the market for initial public offerings.
CoreWeave had listed its IPO at $40, which was below its target range of $47 to $55, according to the Wall Street Journal. However, the stock began trading on Friday at $39, below that IPO price.
The poor debut is a sign of cooling enthusiasm for AI as investors continue to debate whether the money being poured into the industry is worth it. It also offers a meager outlook for IPOs this year as markets struggle to look past headwinds from tariffs.
Tariff anxiety continues to roil markets
President Donald Trump’s tariff proposals have also clouded investor sentiment and stoked uncertainty on Wall Street.
Investors continued to grapple with Trump’s announcement on Wednesday of 25% tariffs on all cars shipped into the US, set to go into effect April 3. Trump also announced tariffs on car parts like engines and transmissions, set to take effect “no later than May 3,” according to the proclamation he signed.
Investors sold off stocks amid renewed anxiety about the impact of auto tariffs on the economy. Tariffs are a tax on imported goods, and economists expect Trump’s sweeping tariff proposals will cause an increase in consumer prices and drag on economic growth.
“It’s natural for people to expect higher prices because we haven’t seen a trade war like this since McKinley,” Art Hogan, chief market strategist at B. Riley Wealth Management, told CNN’s Matt Egan.
The yield on the 10-year Treasury note fell to 4.26% as investors snapped up government bonds, highlighting a risk-averse sentiment amid tariff uncertainty.
Wall Street’s fear gauge, the Cboe Volatility Index, or VIX, surged 16%. CNN’s Fear and Greed Index ticked into “extreme fear” territory, highlighting renewed anxiety among investors.
The tariffs on autos are an escalation in a trade war with the US’ biggest trading partners, threatening to roil global markets and disrupt a deeply intertwined supply chain across North America.
“While the economy appears solid, business executives are adopting a cautious stance on new investments, largely due to the Trump administration’s aggressive and unpredictable tariff policy,” said Matt Stephani, president of Cavanal Hill Investment Management, in an email.
Trump’s decision to announce the tariffs on autos ahead of the April 2 deadline when reciprocal tariffs are set to be revealed — a date dubbed “Liberation Day” by the Trump administration — has caused unease in markets. The early announcement highlights Trump’s commitment to tariffs, testing some investors’ initial hope that they might only be a negotiating tactic.
“We think the proposed tariffs as announced would deliver a big hit to the auto industry, stoking higher costs, higher prices and a sharp decline in US sales,” said Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, in a note Thursday.
“[The] question is what these very aggressive automotive tariffs signal for next week’s announcement on both reciprocal and ex-auto sector tariffs,” Marcelli added.
Wall Street’s outlook sours
Wall Street’s expectations for US stocks this year are being revised down amid continued announcements about tariffs.
Analysts at UBS on Friday trimmed their year-end target for the S&P 500 to 6,400 from 6,600.
Analysts at Barclays this week lowered their year-end target for the S&P 500 to 5,900 from 6,600. Goldman Sachs earlier this month lowered its year-end target to 6,200 from 6,500.
Ed Yardeni, president of investment advisory Yardeni Research, recently lowered his year-end target to 6,400 from 7,000.
Meanwhile, the most actively traded gold futures contract in New York on Friday surged above a record high $3,100. Gold is considered a safe haven amid economic turmoil and a hedge against potential inflation.
Goldman Sachs this week revised its year-end target for gold prices to $3,300, up from $3,100, underscoring how the yellow metal’s rise this year is expected to last amid economic and geopolitical uncertainty.
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