The report also showed that an underlying measure of how much income Americans are making, which excludes government social benefits and some other items, “has been treading water for the last three months,” said Brian Jacobsen, chief economist at Annex Wealth Management.
“Households aren’t in a good place to absorb a little tariff pain,” he said. “The Fed isn’t likely to run to the rescue either as inflation moved up more than expected in February.”
The Fed could return to cutting interest rates like it was doing late last year in order to give the economy and financial markets a boost. But such cuts would also push upward on inflation, which has been sticking above the Fed’s 2 per cent target.
The economy and job market have been holding up so far, but if they were to weaken while inflation stays high, it would produce a worst-case scenario called “stagflation.” Policymakers in Washington have few good tools to fix it.
Some of Wall Street’s sharpest losses on Friday hit companies that need customers feeling confident enough to spend, and not just on yoga wear or beach clothes. Delta Air Lines lost 5 per cent. Casino operator Caesars Entertainment dropped 5 per cent. Domino’s Pizza sank 5.1 per cent.
The heaviest weights on the market were Apple, Microsoft and other Big Tech stocks, whose massive sizes give their movements more sway over indexes. They and other stocks that had gotten caught up in the frenzy around artificial intelligence technology have been among the hardest hit in Wall Street’s recent sell-off.
Their prices had shot up so much more quickly than their already fast-growing revenues and profits that critics said they looked too expensive. CoreWeave, whose cloud platform helps customers manage complex AI infrastructure, was flat in its first day of trading on the Nasdaq.
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On the flip side, among the relatively few rising stocks on Wall Street were those that can make money almost regardless of what the economy does, such as utilities. American Water Works rose 2.2 per cent.
All told, the S&P 500 fell 112.37 points to 5,580.94. The Dow Jones Industrial Average dropped 715.80 to 41,583.90, and the Nasdaq composite lost 481.04 to 17,322.99.
Stock markets worldwide will likely remain shaky as an April 2 deadline approaches for more tariffs. That’s what Trump has called “Liberation Day,” when he will roll out tariffs tailored to each of the United States’ trading partners.
In stock markets abroad, indexes fell sharply in Japan and South Korea as automakers felt more pressure following Trump’s announcement that he plans to impose 25 per cent tariffs on auto imports. Hyundai Motor fell 2.6 per cent in Seoul, while Honda Motor fell 2.6 per cent, and Toyota Motor sank 2.8 per cent in Tokyo.
Thailand’s SET lost 1 per cent after a powerful earthquake centred in Myanmar rattled the region, causing the prime minister to declare a state of emergency for the capital, Bangkok.
In the bond market, the yield on the 10-year Treasury tumbled to 4.25 per cent from 4.38 per cent late Thursday. It tends to fall when expectations for either US economic growth or inflation are on the wane.
AP
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