The US stock market experienced a significant downturn on Friday, driven by investor anxieties over potential new tariffs from the Trump administration, coupled with a surge in consumer inflation expectations and a less-than-stellar jobs report.
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The S&P 500 index declined almost 1%, while the tech-focused Nasdaq Composite slid around 1.4%, marking the second consecutive week of losses for both. The Dow Jones Industrial Average also tumbled more than 400 points, nearly a 1% drop, representing its worst daily performance in approximately four weeks.
Tariff Threats and Consumer Sentiment Weigh on Markets
President Trump’s announcement on Friday of impending reciprocal tariffs on American imports further fueled market anxieties. These comments, made during a meeting with Japanese Prime Minister Shigeru Ishiba, included the possibility of tariffs on Japanese goods.
Adding to the negative sentiment, a University of Michigan survey revealed that US consumer sentiment plummeted to a seven-month low in early February, falling short of forecasts. Inflation expectations soared to 4.3% over the next year, a full percentage point higher than the previous month, reflecting growing concerns over the potential impact of Trump’s tariff threats.
Jobs Report Shows Mixed Signals
The January jobs report, while indicating continued resilience in the labor market, also contributed to market volatility. The US economy added 143,000 jobs in January, below economist expectations of 173,000. However, the unemployment rate decreased to 4.0% from 4.1% in December. The 10-year Treasury yield briefly spiked to 4.5% following the release of the sentiment update and jobs report.
Tech Giants Face Revenue Challenges
Amazon’s stock price experienced a 4% decline after the e-commerce giant, along with Google and other AI-focused tech companies, presented a disappointing revenue outlook, further dampening investor confidence.
Conclusion: Market Uncertainty Persists
The confluence of tariff threats, rising inflation expectations, and a mixed jobs report created significant market volatility on Friday. While the labor market demonstrates resilience, investor concerns regarding potential trade wars and rising prices continue to weigh heavily on market sentiment. These factors point to continued uncertainty in the near term.
