Stocks plunge as consumer confidence wavers amid inflation and tariff concerns
Alona Yadav | Feb 22, 2025, 13:08 IST
( Image credit : AP )
Wall Street saw a significant downturn as inflation concerns and potential tariffs impacted investor confidence. The Dow Jones Industrial Average dropped 748 points, with the S&P 500 and Nasdaq also declining. Consumer sentiment declined sharply due to inflation fears and economic policy uncertainties.
Wall Street experienced a significant downturn on Friday as mounting concerns over inflation and potential tariffs rattled investor confidence. The Dow Jones Industrial Average dropped 748 points, marking a two-day decline of approximately 1,200 points and highlighting growing economic uncertainties under the Trump administration.
The market decline coincided with the release of the University of Michigan's latest consumer sentiment survey, which revealed a sharp 10% decrease in February compared to January - twice the decline initially reported. The S&P 500 fell 1.7%, while the Nasdaq saw an even steeper decline of 2.2%.
Consumer anxiety appears to be centered on two key issues: inflation fears and the potential impact of Trump's tariff policies. A recent CNN poll found that 62% of Americans believe the administration isn't doing enough to combat inflation. The Michigan survey indicated that consumers now expect inflation to reach 4.3% in the coming year, up a full percentage point from January and the highest level since November 2023.
These concerns are beginning to manifest in real economic indicators. Job growth has slowed as employers adopt a wait-and-see approach to the administration's economic policies. The housing market shows signs of strain, with existing home sales dropping 4.9% in January while prices climbed to record highs, further complicating America's housing affordability challenges.
Adding to market pressures, retail giant Walmart issued a warning about slowing sales and profit growth, citing consumer concerns over rising prices and tariffs. This announcement surprised many Wall Street analysts who had viewed Walmart's budget-friendly business model as relatively inflation-resistant.
Further contributing to the market decline was a 7% drop in UnitedHealth shares following a Wall Street Journal report about a Department of Justice investigation into the company's Medicaid billing practices, which the company strongly denies.
Despite the sharp two-day decline, market analysts note that stocks remain near their historic highs, with the S&P 500 having reached a record level just Wednesday. However, the combination of weakening economic data, consumer anxiety, and policy uncertainties suggests that markets may face continued volatility in the near term.
The market decline coincided with the release of the University of Michigan's latest consumer sentiment survey, which revealed a sharp 10% decrease in February compared to January - twice the decline initially reported. The S&P 500 fell 1.7%, while the Nasdaq saw an even steeper decline of 2.2%.
Consumer anxiety appears to be centered on two key issues: inflation fears and the potential impact of Trump's tariff policies. A recent CNN poll found that 62% of Americans believe the administration isn't doing enough to combat inflation. The Michigan survey indicated that consumers now expect inflation to reach 4.3% in the coming year, up a full percentage point from January and the highest level since November 2023.
These concerns are beginning to manifest in real economic indicators. Job growth has slowed as employers adopt a wait-and-see approach to the administration's economic policies. The housing market shows signs of strain, with existing home sales dropping 4.9% in January while prices climbed to record highs, further complicating America's housing affordability challenges.
Adding to market pressures, retail giant Walmart issued a warning about slowing sales and profit growth, citing consumer concerns over rising prices and tariffs. This announcement surprised many Wall Street analysts who had viewed Walmart's budget-friendly business model as relatively inflation-resistant.
Further contributing to the market decline was a 7% drop in UnitedHealth shares following a Wall Street Journal report about a Department of Justice investigation into the company's Medicaid billing practices, which the company strongly denies.
Despite the sharp two-day decline, market analysts note that stocks remain near their historic highs, with the S&P 500 having reached a record level just Wednesday. However, the combination of weakening economic data, consumer anxiety, and policy uncertainties suggests that markets may face continued volatility in the near term.