Wall Street Ends Worst Month in a Year. Inflation, Tariff Fears Shake Investor Confidence/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Wall Street is closing out its worst month since April, as stocks remain volatile amid economic uncertainty. The S&P 500 slipped 0.1% on Friday morning, extending a losing streak that erased its gains for the year. Investors are concerned about slowing consumer spending, persistent inflation worries, and the impact of President Donald Trump’s aggressive tariff policies. While inflation data met expectations, a sharp decline in January spending raised concerns about economic momentum. The Nasdaq fell 0.5%, while the Dow Jones Industrial Average posted a modest 51-point gain.
Stock Market Turbulence Quick Looks
- S&P 500 down 0.1% as Wall Street heads for its worst month since April.
- Nasdaq drops 0.5%, while Dow ekes out a 51-point gain.
- January consumer spending saw its sharpest decline in four years.
- Trump’s proposed tariffs on China, Canada, and Mexico fuel inflation fears.
- AI-driven stocks, including Nvidia, continue sharp declines.
- Global markets fall, with major Asian indexes dropping 2%-3.4%.
Wall Street Ends Worst Month in a Year. Inflation, Tariff Fears Shake Investor Confidence
Deep Look: Wall Street Stumbles to Close Out Volatile Month
After a strong start to 2024, the stock market is struggling to regain momentum, as inflation concerns, slowing consumer spending, and trade uncertainty weigh on investors.
S&P 500 Wipes Out 2024 Gains
The S&P 500 has fallen in five of the last six trading days, erasing its year-to-date gains. The latest 0.1% dip on Friday morning follows weak economic reports and increased fears over Trump’s tariffs, which could drive up costs for businesses and consumers alike.
“If the market doesn’t see Trump moving toward more market-friendly policies, trust could continue eroding,” Bank of America economists warned.
Consumer Spending Plunges to Start the Year
A Commerce Department report released Friday showed that consumer spending dropped 0.2% in January, marking the sharpest decline in four years.
“Consumer spending’s unexpectedly sharp decline at the start of the year is consistent with other data signaling a shift to more sustainable growth,” said Gary Schlossberg, market strategist at Wells Fargo Investment Institute.
While some of the spending pullback may be due to severe winter weather, it also follows growing concerns about economic stability.
AI Stocks and Crypto Take a Hit
The biggest market losers include previously high-flying AI stocks, with Nvidia dropping another 1.1% after an 8.5% tumble on Thursday. Bitcoin has also slid more than 20% from its recent record high.
Trump’s Tariffs Stir Market Uncertainty
Investors remain wary of Trump’s aggressive tariff plans, which include:
- Doubling tariffs on Chinese imports to 20%.
- Imposing a 25% tariff on Canadian and Mexican goods next week.
China’s Commerce Ministry protested the move, saying it would “undermine the stability of the global industrial chain”.
The uncertainty has already impacted global markets, with Hong Kong’s Hang Seng down 3.3%, Tokyo’s Nikkei down 2.9%, and Seoul’s Kospi tumbling 3.4%.
Federal Reserve Stays Watchful
Despite economic concerns, inflation showed modest improvement, with core inflation dropping to 2.6% from 2.9% in December.
“Inflation data met expectations, which may reassure Fed officials that price pressures are cooling,” analysts noted.
Treasury yields edged lower, with the 10-year Treasury yield falling to 4.24%, signaling investor caution about future economic growth.
What’s Next?
- Wall Street braces for more volatility as investors assess tariff risks and economic data.
- Consumer spending trends will be key, as lower demand could signal slowing growth.
- The Fed will closely monitor inflation, as interest rate policy remains in focus.
With market uncertainty rising, investors are awaiting signals on how aggressively Trump will pursue his economic agenda—and how the Federal Reserve will respond.
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