The tech-heavy Nasdaq Composite fell nearly 550 points, owing to an 8.5% post-earnings drop from street darling Nvidia. Other stocks like Salesforce also contributed to the fall. On the other hand, the Dow Jones fell close to 650 points from the day’s high to end 200 points lower as US President Donald Trump confirmed that tariffs are coming on March 4 and April 2. The S&P 500 also closed 1.6% lower.
All the uneasiness around the actual impact of potential US tariffs on things like trade, the economy, inflation and even geopolitics kept Wall Street traders on their toes. And there was no major relief from Thursday’s big batch of economic data released in the run-up to a key inflation reading.
The US economy advanced at a healthy pace and inflation was more stubborn than initially estimated at the end of 2024. Gross domestic product increased at an unrevised 2.3% annualized pace in the fourth quarter. The primary growth engine — consumer spending — advanced at a 4.2% pace.
The yield on 10-year Treasuries rose two basis points to 4.27%. The Bloomberg Dollar Spot Index added 0.6%.
“Investors want lower rates from the Fed, but they don’t want to get there by seeing a notable deterioration in the underlying economy,” said Bret Kenwell at eToro. “At the very least, if the economy is going to slow, investors will want to see inflation slow down too.”
Pessimism among individual investors about the short-term outlook for stocks increased, according to the latest Sentiment Survey from the American Association of Individual Investors.
Bearish sentiment, expectations that stock prices will fall over the next six months, increased 20.2 percentage points to 60.6%. Bullish sentiment dropped to 19.4% while neutral sentiment decreased to 20%, the AAII survey showed.
“AAII data on investor sentiment showed both an extremely high level of bearishness and a rapid increase in that metric,” said Bespoke Investment Group strategists. “Historically, high levels of bearishness tend to lead to strong returns, but these levels are unprecedented with stocks near recent highs.”
Traders also geared up for the Federal Reserve’s preferred inflation metric, which is expected to cool to the slowest pace since June, but glacial progress on taming price pressures overall will keep policymakers cautious about lowering interest rates further.
The core personal consumption expenditures price index — which excludes often-volatile food and energy costs — probably rose 2.6% in the year through January in Commerce Department data due on Friday. Overall PCE inflation likely eased on an annual basis as well, according to the median estimate in a Bloomberg survey of economists.
(With Inputs From Agencies.)
