US stocks tumbled on Friday, extending a sell-off in the wake of dour economic reports and closing the book on a holiday-shortened week fraught with new tariff threats and worries of softening consumer demand.
All three major US stock indexes moved decisively lower on the heels of the data, and continued their slide into afternoon trading.
The S&P 500 suffered its largest single-day percentage drop since 18 December, as did the small-cap Russell 2000.
For the week, all three indexes lost ground, with the Dow registering its steepest Friday-to-Friday plunge since mid-October.
“I don’t like all this red on a Friday,” said Greg Bassuk, CEO at AXS Investments in New York. “We’re seeing consumer sentiment, tariffs and corporate earnings having leap-frogged AI and technology as the primary drivers of market direction.”
Economic data showed US business activity decelerating and consumer sentiment deteriorating, with survey participants expressing an increasingly gloomy outlook in the face of economic unknowns.
The data comes on the heels of Walmart’s disappointing guidance on Thursday, which sparked fears of dampening consumer demand.
US businesses’ optimism has “evaporated”, according to PMI commentary provided by S&P Global’s chief business economist, Chris Williamson, amid “a darkening picture of heightened uncertainty”.
“Uncertainty is the new investor narrative,” Bassuk of AXS Investments added. “It’s sparking the volatility that we’ve seen this week.
“We’re anticipating that the uncertainty and the volatility is going to remain at least through the end of this first quarter.”
Megacap momentum stocks dropped 2.9%, and every stock in the “magnificent seven” ended in negative territory, with Nvidia, due to report earnings next week, tumbling 4.1%.
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The Chicago Board Options Exchange (CBOE) volatility index closed at its highest level since 3 February.
This week, Donald Trump said he will soon announce new tariffs covering lumber and forest products, on the heels of previously announced plans to impose duties on imported cars, semiconductors and pharmaceuticals.
The Dow Jones Industrial Average fell 748.63 points, or 1.69%, to 43,428.02; the S&P 500 fell 104.39, or 1.71%, to 6,013.13; and the Nasdaq Composite fell 438.36, or 2.20%, to 19,524.01.
Among the 11 major sectors of the S&P 500, all but consumer staples ended lower, with consumer discretionary and tech suffering the steepest percentage losses.
