Stan Choe, AP Business Writer
NEW YORK (AP) – U.S. stocks fell on Friday after halting how willing US households spend, given the latest inflation information and all the uncertainty about President Donald Trump’s escalating trade war.
The S&P 500 was on track on one of the worst days of the last two years, down 2% in afternoon trading. We’re also heading towards the week where we lost our fifth in the final six after wiping out what was previously a big win week.
The Dow Jones industrial average fell 722 points (1.7%) as of 1:12 pm east time, with the Nasdaq Composite down 2.7%.
Lululemon Athletica helped athletic apparel sellers to lead the market by falling 14.8% despite reporting profits in the recent quarter than analysts expected. CEO Calvin McDonald said:
Lululemon also said changing the value of tariffs and foreign currencies could account for a decrease of about half of the key measures of expected performance.
Oxford Industries, the company behind the Tommy Bahamas and Lily Pulitzer brands, similarly reported stronger results in the recent quarter than expected, but stocks fell 3.2%. CEO Tom Chubb said he saw a “growth in consumer sentiment” that began in January, which accelerated from January to February.
They say one of the main concerns that hit Wall Street is that Trump’s trade war could freeze spending by US households and businesses. Even if tariffs are less painful than feared, all uncertainty can be filtered into altered behaviours that hurt the economy.
A report on Friday morning showed that all types of U.S. consumers are more pessimistic about future finances, including Republicans, Independences and Democrats. Two of the three consumers surveyed by the University of Michigan expect future unemployment to worsen. It’s the best reading since 2009 and causes worry about the job market to keep the US economy steady.
Another report released in the morning raised concerns after showing that it was widely tracked. The underlying measure of inflation was a worse tactile sensation last month than economists expected. The data followed reports on other measures of inflation for the month, which is the one that the Federal Reserve most closely tracks to determine what to do with interest rates.
Also, Annex Wealth Management Chief Economist Brian Jacobsen showed that the underlying measure of income that excludes government social interests and other items has been “stomping on water for the past three months.”
“The household is not in a suitable place to absorb a bit of tariff pain,” he said. “The Fed cannot be led to rescue as inflation rose more than expected in February.”
The Fed has put on key interest rates this year after a major cut in late 2024. This is because they are worried that inflation will remain above the 2% target. Increased interest rate cuts will boost the economy and financial markets, but will also put upward pressure on inflation.
The economy has been relatively well maintained up until now, but if it weakens while inflation remains high, it creates the worst-case scenario called “Stagflation.” Washington policymakers have few good tools to fix it.
Some of Wall Street’s most rapid losses on Friday hit a company that needs to feel enough customers to spend time with confidence, not just yoga clothes and dresses. Delta lost 5.1%. Cruise operator Royal Caribbean Group fell 4.7%. Casino operator Caesars Entertainment fell 4.2%.
Conversely, some of the relatively low Wall Street stock prices were stocks, such as utilities, which could make most of the money, regardless of what the economy was doing. For example, plumbing in the United States rose 2.5%.
Stock markets around the world may remain volatile as the April 2nd deadline approach for more tariffs. That’s what Trump called the “liberation day” when he deployed tariffs tailored to US trading partners. In each case, he said “mutual” tariffs coincided with other US countries’ burdens, including value-added taxes.
In the overseas stock market, the index fell sharply in Japan and South Korea as carmakers felt more pressure after the announcement that they were planning to impose a 25% tariff on car imports. Hyundai Motor fell 2.6% in Seoul, Honda Motor fell 2.6%, and Toyota Motor slumped 2.8% in Tokyo.
On Wall Street, Ford Motor fell 2.5% and General Motors sank 1.6%. Even US automakers selling vehicles domestically can feel the pain of such tariffs as their supply chains spread across North America. Trump says he hopes more manufacturing will take place in the US.
The Thai Set lost 1% after a powerful earthquake, centered on Myanmar, rattled the area and declared an emergency in the prime minister’s capital, Bangkok.
In the bond market, 2010-year Treasury yields fell from 4.38% to 4.25% in the second half of Thursday. If expectations for US economic growth or inflation are waning, it tends to decline.
AP writers Jiang Junzhe and Matt Ott contributed.
Original issue: March 28, 2025 10:40am EDT
