Stocks fell sharply on Friday as a hotter-than-expected inflation reading boosted concerns surrounding the health of the U.S. economy under President Donald Trump's trade policies. The Dow Jones Industrial Average sank over 700 points, while the S&P 500 Index and Nasdaq Composite lost about 2% and 3%, respectively.
Here's how the market settled to close out the week:
S&P 500 Index
Dow Jones Industrial Average
Nasdaq Composite Index
The Commerce Department's core personal consumption expenditures price index (CPI) accelerated at a higher-than-expected rate in February on Friday, signaling that the Federal Reserve may continue their conservative approach on interest rates as inflationary pressures persist.
The Fed's preferred inflation gauge -- which excludes volatile food and energy prices -- rose 2.8% last month, increasing 0.4% month-over-month for the biggest monthly gain since January 2024. That jump also put the 12-month inflation rate at 2.8%.
Headline CPI also rose 0.3% on the month in February and 2.5% year-over-year, both coming in-line with expectations.
"It looks like a 'wait-and-see' Fed still has more waiting to do," said Ellen Zentner, chief economic strategist at Morgan Stanley wealth Management, in a note on Friday. "Today's higher-than-expected inflation reading wasn't exceptionally hot, but it isn't going to speed up the Fed's timeline for cutting interest rates, especially given the uncertainty surrounding tariffs."
Consumer Sentiment also ticked lower in the University of Michigan's final reading for March on Friday, coming in at 57 as inflation expectations continue to rise across political lines.
"Long-run inflation expectations surged from 3.5% in February to 4.1% in March, reflecting from a large surge among independents plus a sizeable rise among Republicans," said Joanne Hsu, director of the Surveys of Consumers, in a statement.
"This month's decline reflects a clear consensus all demographic and political affiliations; Republicans joined independents and Democrats in expressing worsening expectations since February for their their personal finances, business conditions, unemployment, and inflation," Hsu added.
Adding to more trade uncertainty on Friday, the new Canadian Prime Minister Mark Carney spoke with Trump and warned that the country's northern neighbor plans to enact additional tariffs on imports from the United States. Carney replaced Justin Trudeau earlier this month and his position is subject to Canada's federal election on April 28.
"The Prime Minister informed the President that his government will implement retaliatory tariffs to protect Canadian workers and our economy, following the announcement of additional U.S. trade actions on April 2, 2025," a statement read following talks between the two leaders.
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Raymond James analyst Rick Patel downgraded Lululemon Athletica
"This was prompted by lower U.S. traffic in F1QTD due to an uncertain consumer. LULU already has self-help initiatives underway through accelerating innovation. But despite favorable initial reads from recent product launches (improvement in conversion, average order value, units per transaction), the U.S. remains challenged and is only planned to grow modestly in FY25," Patel wrote in a note to clients. "Net, we're on the sidelines looking for more conviction on upside to reset expectations."
