Shares were sold on Friday after new federal data rose faster than expected and rekindled Wall Street inflation fears.
The Dow Jones industrial average fell by more than 630 points shortly after the 12:30pm EDT, a loss of 1.5%. The NASDAQ Composite fell by 2.4%, while the S&P 500 index fell by 1.8%.
Stock slides began shortly after the commercial sector released data showing an unexpected rapid rise in consumer prices.
The Personal Consumption Expense (PCE) price index has increased by 2.5% over the past year, but includes 2.8%, which does not include food and energy prices. Each month, the PCE index increased by 0.3%, while Core PCE increased by 0.4%.
Stocks have been steadily declining over the past two months as Wall Street is braces due to the economic impact of President Trump's trade agenda. Economists hope Trump's new aggressive import taxes will raise prices for major US goods and slow the economy.
By April 2, Trump announced plans to impose tariffs on countries that are not on sale, along with a 25% tariff on all foreign cars and auto parts. The President had previously ordered a 25% tax on all Canadian and Mexican goods, before temporarily relaxing these tariffs after consultations with their respective countries.
Trump argues that his new tariffs will bring manufacturing jobs back to the US, leading to an influx of foreign revenues, and that the short-term pain is worth the long-term profits.
“We're a pig bank that everyone steals, and they've been doing it for decades, and we're not going to let it happen,” he said this week.
But consumers and businesses are increasing concern about the impact of Trump's tariffs and the lack of faith in his ability to fulfill his promises.
According to the University of Michigan Consumer Sentiment Survey, consumer inflation expectations for the next year have risen to 5%, up from 4.3% last month. This marked the best read since 2022 and the rise in expectations over the past three months that Michigan pollers described as “unusually large.”
