Market Recap: Stocks Plunge on Inflation Fears and Tariff Concerns

The stock market experienced a significant downturn on Friday, March 28, 2025, as investors grappled with hotter-than-expected inflation data and growing concerns over the impact of impending tariffs. Major indexes closed sharply lower, marking a volatile end to a tumultuous month for Wall Street.

Major Index Performance

The Dow Jones Industrial Average (^DJI) plummeted 685 points, or 1.6%, while the S&P 500 (^GSPC) shed 1.9%, and the tech-heavy Nasdaq Composite (^IXIC) plunged 2.5%. This selloff has put the S&P 500 and Nasdaq on track for their fifth weekly decline in six weeks, with the S&P 500 down more than 1% and the Nasdaq losing over 2% for the week.

Inflation Concerns and Economic Data

The market’s decline was fueled by the release of the core Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge. The index rose 2.8% year-over-year in February, exceeding economists’ expectations of 2.7%. This data, coupled with the University of Michigan’s final read on consumer sentiment for March reflecting the highest long-term inflation expectations since 1993, intensified worries about persistent inflation.

Tariff Anxiety and Trade Policy Uncertainty

Adding to the market’s woes, investors are increasingly concerned about the potential impact of reciprocal tariffs set to take effect on April 2. President Trump’s recent announcement of 25% levies on foreign cars has particularly rattled the auto sector, with General Motors (GM) leading the S&P 500 decliners on Thursday with a 7% drop.

Notable Stock Movements

Several major companies saw significant price movements:

1. Lululemon Athletica (LULU): Shares tumbled more than 14% after the company issued weaker-than-expected 2025 guidance, citing economic and inflation concerns impacting consumer spending.

2. U.S. Steel (X): The stock jumped nearly 5% following reports that Japan-based Nippon Steel is willing to invest up to $7 billion to secure approval for their merger.

3. Bausch + Lomb (BLCO): Shares pulled back more than 4% after announcing a voluntary recall of certain implantable eye lenses.

4. Alphabet (GOOGL) and Amazon (AMZN): Both tech giants lost more than 3% each, contributing to the broader market decline.

5. Microsoft (MSFT) and Meta (META): Each declined by about 2%, further pressuring the tech sector.

Upcoming Market Events

Investors should keep an eye on several key economic events in the coming week:

1. S&P Global Composite and Services PMI final readings for March (April 1)
2. Consumer Confidence report for March (April 2)
3. New Home Sales data for February (April 2)
4. Durable Goods Orders for February (April 3)
5. Initial Jobless Claims (April 4)
6. Personal Income and Spending reports for February (April 5)

Market Outlook

As the market heads into April, investors remain cautious due to the combination of inflationary pressures, trade policy uncertainties, and potential economic slowdown. The implementation of reciprocal tariffs on April 2 is expected to be a significant event that could further impact market sentiment and sector performance.

Scott Helfstein, head of investment strategy at Global X, commented on the current market situation: “The market is getting squeezed by both sides. There is uncertainty around next week’s reciprocal tariffs hitting the major exporting sectors like tech alongside concerns about a weakening consumer facing higher prices hitting areas like discretionary.”

As we move forward, market participants will be closely monitoring economic data, corporate earnings, and policy developments to gauge the direction of the economy and potential Federal Reserve actions in response to persistent inflation concerns.