Traders work on the floor at the New York Stock Exchange on Feb. 12, 2025.
Brendan McDermid | Reuters
Stocks sold off on Friday as new U.S. data sparked concern among investors over a slowing economy and sticky inflation, leading them in search of safer assets.
Losses increased into the close as traders feared staying long into a weekend that could bring another barrage of headlines from the Trump administration, which has proposed a flurry of tariffs and other market-moving policy changes since taking charge a month ago.
The Dow Jones Industrial Average lost 724 points, or 1.6%, bringing its two-day losses to more than 1,200 points. Friday’s loss was it’s biggest of the young year. The S&P 500 traded 1.6% lower, falling for a second day after closing at a record on Wednesday. The Nasdaq Composite dropped more than 2%.
A series of economic data raised new concerns about the economy and sent investors into bonds, which caused yields to tumble. The University of Michigan consumer sentiment index fell to 64.7 in January, a decline of 10% and a steeper drop than expected as consumers raised concerns about higher inflation ahead from possible new tariffs. The 5-year inflation outlook in the survey was 3.5%, the highest since 1995. On top of that, existing home sales in the U.S. fell more than expected last month to 4.08 million units. The U.S. services purchasing managers index also dropped into contraction territory for February, according to S&P Global.
Walmart shares were down for a second day after the company issued a weaker-than-expected forecast that also soured the outlook for the consumer and the economy.
Prominent investor Steve Cohen gave some negative comments on the market and economy from a conference in Miami.
“It’s definitely a period where I think the best gains have been had and [it] wouldn’t surprise me to see a significant correction,” Cohen said, citing proposed tariffs dragging on the economy, as well as some of the government’s cost-cutting efforts.
Investor favorites like Nvidia and Palantir saw steep losses on Friday as they shifted toward traditionally safer assets. Procter & Gamble climbed more than 1%, while General Mills and Kraft Heinz advanced more than 2% each.
For the week, the S&P 500 is about 1.6% lower, while the Dow and Nasdaq have lost 2.5% and 2.4%, respectively.
“The top 20 performers in the S&P 500 today are all from defensive sectors: consumer staples, utilities and healthcare,” said Larry Tentarelli, chief technical strategist and founder of the Blue Chip Daily Trend Report. “Investors often rotate into these so-called defensive sectors when economic growth concerns appear.”
