Stocks Slide as Tariff and Inflation Fears Rattle Markets

U.S. stocks fell sharply on Friday as concerns over tariffs and inflation spooked investors, erasing most of the week’s gains.

Major Indexes Drop

• Dow Jones Industrial Average: -414 points (-0.9%)
• S&P 500: -0.8%
• Nasdaq Composite: -1%

Stocks turned lower after President Donald Trump announced plans for reciprocal tariffs on trading partners, which could increase tariffs across the board to match what other countries charge the U.S.

“I’ll be announcing that next week,” Trump said during a meeting with Japan’s prime minister. “We’ll lay it out pretty simple.”

Inflation and Consumer Sentiment Weigh on Markets

Even before Trump’s tariff comments, traders were on edge due to inflation fears:

• Consumer sentiment fell to 67.8, below the expected 71.3 (University of Michigan Index).
• One-year inflation expectations rose to 4.3%, up one percentage point from January and the highest since November 2023.
• 10-year Treasury yield spiked above 5%, reflecting investor anxiety over rising prices.

Jobs Report Signals Resilient Labor Market

Friday’s January jobs report showed a decline in the unemployment rate to 4.0% (from 4.1%) and higher-than-expected wage growth, complicating the outlook for Federal Reserve rate cuts.

“Today’s employment report probably keeps the Fed on hold for one more meeting,” said Bryce Doty, senior portfolio manager at Sit Investment Associates.

Amazon and Alphabet Struggle

Tech stocks contributed to the selloff:

• Amazon (AMZN): -3% after weak Q1 revenue guidance (5%-9% growth, its slowest ever).
• Alphabet (GOOGL): Continued decline after disappointing earnings earlier in the week.

Volatile Week for Markets

This week saw wild swings in the market:

• Monday: Stocks fell after Trump announced 10% tariffs on China and proposed 25% tariffs on Canada and Mexico.
• Midweek: The S&P 500 rallied for three straight days after Trump paused the Canada-Mexico tariffs.
• Friday: Markets reversed gains on new tariff concerns and inflation data.

Conclusion

The stock market remains volatile as tariffs, inflation, and Fed policy dominate investor concerns. Next week’s developments—including Trump’s official trade announcement—will be closely watched for further market impact.