US stocks tumble as deepening consumer gloom raises stagflation fears https://t.co/VVQUs9BYIZ via @ft
— Oliver Stuenkel 🇧🇷 (@OliverStuenkel) March 28, 2025
The stock market took a sharp downturn on Friday as investors grappled with persistent inflation and growing concerns over tariffs. The Dow Jones Industrial Average plummeted more than 700 points, while the S&P 500 and Nasdaq also experienced significant losses. The Commerce Department reported that the core personal consumption expenditures (PCE) index, a key inflation metric, rose 2.8% in February compared to the previous year.
This exceeded economists’ expectations and marked the highest level since the Federal Reserve began targeting a 2% inflation rate. Federal Reserve Chairman Jerome Powell acknowledged that the central bank had anticipated this increase in inflation.
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However, the higher-than-expected figures have raised concerns among investors about the potential for prolonged high interest rates and their impact on economic growth.
President Donald Trump’s recent announcements regarding tariffs have further compounded market anxieties.
#NewsFatafat | Deep gashes on the Wall Street with all three benchmark indices closing in the red. Hotter-than-expected inflation data and uncertainty over upcoming tariffs send markets in downward spiral#Nasdaq #WallStreet pic.twitter.com/KcZHv6iHkY
— ET NOW (@ETNOWlive) March 29, 2025
The White House has indicated plans to impose tariffs on a wide range of imported goods, sparking fears of retaliatory measures from trading partners and potential price increases for consumers.
Inflation concerns affect Dow significantly
Technology stocks were among the hardest hit in Friday’s selloff. Shares of major companies such as Apple, Amazon, Google, and Microsoft all fell more than 2.6% as investors worried about the implications of a slowing economy and ongoing trade tensions. Economists and market analysts have expressed concerns about the long-term impact of tariffs on inflation and economic stability.
Morgan Stanley Wealth Management’s economic strategist, Ellen Zentner, noted that the Federal Reserve may need to maintain a “wait-and-see” approach for longer than anticipated, delaying the interest rate cuts that investors have been hoping for. The personal saving rate, which measures the percentage of disposable income that Americans save, fell to 4.6% in February. This is below the average savings rate of 5.7% seen since the turn of the millennium, suggesting that consumers may be feeling the squeeze of higher prices and economic uncertainty.
As the market continues to navigate the challenges posed by inflation and shifting trade policies, investors and policymakers alike are closely monitoring economic indicators for signs of stability or further turbulence ahead. The path to economic recovery remains complex, with the potential for ongoing volatility in the financial markets.
