4:08pm: Seeing red
US stocks closed out Friday’s session sharply lower, with the selloff prompted by inflation and tariff fears.
The Nasdaq led the declines, down 2.7% at 17,322 points. The S&P 500 dropped 2% to 5,580 and the Dow Jones fell 1.7% to 41,583 points.
3:21pm: Friday's headlines
CoreWeave shares made their debut on the Nasdaq Friday, with shares dropping as much as 5.8% after trading began.
lululemon shares are down more than 14% on Friday following yesterday’s earnings release that showcased weak first-quarter guidance, overshadowing its stronger-than-expected fourth-quarter results.
United States Steel Corporation and Nippon Steel are once again in active discussions to push forward their $55-per-share acquisition deal, according to new reports.
US consumer spending rebounded in February, but core inflation remained stubbornly high.
2:43pm: CoreWeave sputters in debut
CoreWeave shares made their debut on the Nasdaq Friday, with shares dropping as much as 5.8% after trading began.
The specialized cloud computing provider, which is focused on high-performance workloads, particularly for artificial intelligence (AI), had priced its initial public offering at $40 per share, less than the expected range of $47 to $55.
The Nvidia Corp (NASDAQ:NVDA, ETR:NVD)-backed cloud computing company aims to raise approximately $1.5 billion in what has become the largest technology offering in the United States since 2021.
Following CoreWeave's IPO, Nvidia shares lost around 1.4% Friday afternoon, while Microsoft Corp (NASDAQ:MSFT), a major CoreWeave customer, fell over 3%.
2:06pm: Tariffs add to uncertainty
Despite anticipated clarity on tariffs next week, trade-related uncertainty is expected to persist, according to analysts at Wells Fargo.
According to the analysts, businesses are holding off on new investments as they await policy details, a hesitancy reflected in durable goods data showing stable but cautious demand. However, strong shipments suggest a potential rebound in first-quarter equipment investment following a slowdown tied to the aerospace sector in Q4.
Still, first-quarter economic growth is projected to be weak. While the final Q4 GDP estimate was revised slightly higher to 2.4%, businesses have been stockpiling industrial supplies—particularly metals—in anticipation of tariffs.
Record industrial import surges in December and January, followed by strong February figures, indicate firms have been racing to secure materials.
Wells Fargo noted that this buildup may weigh on Q1 GDP as inventories provide limited support, setting the stage for a lackluster growth print.
1:05pm: Fed's balancing act
The Federal Reserve is facing a delicate balancing act following today's PCE readout.
Comerica’s Bill Adams cautioned that if tariffs increase on April 2 as planned, inflation could pick up further in the coming months.
"The Fed is in a tricky spot. On one hand, the economy is downshifting, which argues for lower rates. On the other hand, inflation looks set to pick up," he said.
Adams predicts the Fed will cut rates by 25 basis points around midyear, likely in July, with the economy regaining momentum by fall. However, he warned that risks are skewed toward the Fed cutting faster than the base case if economic weakness persists.
LPL Financial's Jeffrey Roach also pointed to potential risks, stating that while stable real disposable income growth "will likely provide a buffer for an economy nervous about a trade war and sticky inflation," any faltering in income growth could put the economy at greater risk.
12:11pm: Inflation pressures build
The Nasdaq led the market downturn with a 2.1% drop, driven by weakness in technology stocks amid economic uncertainty and inflation concerns.
The Dow declined 1.2%, while the S&P 500 fell 1.5%, both reflecting broader market volatility influenced by inflation worries and tariff uncertainties.
All three indices are trading below key moving averages, signaling a bearish trend, with the S&P 500’s RSI below 50, suggesting further downside risk.
Market sentiment was further pressured by economic data showing the core PCE price index exceeding forecasts, heightening concerns over inflation and its impact on monetary policy.
11:40am: Auto tariffs to curb growth
Donald Trump’s auto tariffs are expected to pump the breaks on growth, analysts at Deutsche Bank believe.
On Wednesday, President Trump revealed that a 25% tariff would be imposed on automobiles, light trucks, and key automotive parts, including engines, transmissions, powertrain parts, and electrical components, starting April 3.
The tariffs are set to affect up to $330 billion in imports, with the potential to increase to $370 billion once USMCA-compliant parts are included, and possibly even more if additional auto parts are targeted.
DB analysts see the tariffs subtracting anywhere from 10 to 30bps from 2025 real GDP growth if they stay in place for the rest of the year.
“The potentially affected imports were roughly 2% relative to 2024 nominal core PCE expenditures. Assuming 50% passthrough, our back of the envelope calculation would imply that inflation could be about three-tenths higher as a result of these tariffs,” they wrote.
10:35am: PCE jumps
Excluding food and energy prices, core inflation increased by 0.37% month-over-month in February, marking the highest monthly rate in over a year.
The February Personal Income and Spending report revealed a 0.1% increase in real personal spending, following a 0.6% decline in January. The savings rate rose to 4.6%, the highest since last summer, indicating growing consumer caution.
Headline annual inflation remained steady at 2.5%, while core inflation, excluding food and energy, edged up to 2.8% from 2.7%. Prices for healthcare and recreation rose faster than usual, partly due to a rebound from January's decline in healthcare costs.
This shift in consumer behavior highlights growing concerns about future economic stability. As inflation remains persistent and discretionary spending weakens, experts are closely monitoring how income growth will influence broader economic trends.
"Spending on restaurants and hotels declined the most in over two years as discretionary spending is weakening. However, stable real disposable income growth will likely provide a buffer for the economy nervous about a trade war and sticky inflation," said Jeffrey Roach, Chief Economist for LPL Financial. "But if income growth falters, the economy will be at greater risk."
9:50am: Stocks open lower
Stocks opened lower on Friday as investors weighed economic data and awaited potential tariff announcements.
The Dow Jones fell 193 points (0.5%) to 42,106, the S&P 500 declined 18 points (0.3%) to 5,675, and the Nasdaq dropped 75 points (0.4%) to 17,729.
Market concerns over a potential economic slowdown and uncertainty surrounding President Donald Trump’s expected tariff plans have contributed to the downturn, with the S&P 500 now down 3.24% year-to-date.
Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank, noted that sentiment remains sour due to intensifying tariff talk, particularly impacting global carmakers. Automakers producing outside the US could see costs rise by 25% if the levies take effect, with Evercore ISI predicting US car prices could increase by $3,000–$4,000 on average. GM fell over 7% yesterday, while Kia Motors and Honda lost 7.5% and 9%, respectively, since their weekly peaks.
"It’s hard to be optimistic when we know that retaliation will emerge and uncertainties will continue with possible retaliation," Ozkardeskaya said.
Meanwhile, gold continues to surge as investors seek safe-haven assets amid escalating geopolitical tensions.
"Investors buy gold each time they hear the word ‘tariff’," Ozkardeskaya added.
8:50am: PCE steady
The Personal Consumption Expenditures (PCE) inflation, the Federal Reserve's preferred inflation gauge, remained steady at 2.5%, in line with expectations.
However, core PCE inflation, which excludes food and energy, rose to 2.8%, surpassing the forecast of 2.7%. This marks an uptick in core inflation, which was also revised upward for January to 2.7%.
On the economic front, personal income grew by $194.7 billion (0.8% monthly), with disposable personal income (DPI) increasing by $191.6 billion (0.9%). Meanwhile, personal consumption expenditures (PCE) saw a rise of $87.8 billion (0.4%). Personal saving stood at $1.02 trillion, with a saving rate of 4.6%.
Year-over-year, PCE inflation remained at 2.5%, while core PCE inflation rose by 2.8%.
8am: US stocks set to extend loss
US stock futures pointed to a slightly weaker start ahead of the opening bell on Friday, extending Thursday's losses on the back of intensifying tariff talks.
Nasdaq futures were down 0.27%, while those for the S&P 500 and the Dow Jones were down by 0.15% and 0.13%.
US stocks closed lower on Thursday as President Donald Trump’s announcement of new auto tariffs pressured market sentiment.
The Dow fell 155 points, or 0.4%, to 42,300, the S&P 500 dropped 19 points (0.3%) to 5,693, and the Nasdaq slid 95 points (0.5%) to 17,804.
The 25% tariff on imported vehicles and light trucks, announced Wednesday, heightened trade tensions and weighed on automakers like General Motors and Ford. Tech stocks also struggled, with Nvidia and Tesla seeing declines earlier in the week.
The S&P 500 and Nasdaq are on track for a negative first quarter, a reversal from previous strength. Investors await Friday’s release of the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index.
The core PCE Price Index is expected to rise 0.3% month-on-month and 2.7% year-on-year in February. Annual PCE inflation is forecast to hold steady at 2.5%. Markets expect the Federal Reserve to hold policy rates unchanged in May.
"The inflation data could be very important for the market since investors have tended to rely on the Fed to come to the rescue whenever things get rocky for the economy, and by extension, Wall Street," commented Neil Wilson, analyst at TipRanks.com.
"Currently markets anticipate 2-3 25bps cuts this year. However, Atlanta Fed President Raphael Bostic signalled on Monday that a bumpy ride for inflation this year – due to tariffs – means he’s only expecting one cut this year."