On Friday, the US stock markets experienced a significant decline following the release of an economic report indicating that American consumers are becoming increasingly apprehensive about rising prices and the potential impact of President Donald Trump's tariffs on inflation.
The Dow Jones Industrial Average plummeted by 748 points, marking a 1.7% decrease. Similarly, the broader S&P 500 and the Nasdaq also experienced declines of 1.7% and 2.2%, respectively. This decline in the Dow marked the second consecutive day of losses, with a total drop of approximately 1,200 points over Thursday and Friday.
The latest survey from the University of Michigan, published on Friday, revealed a concerning trend in US consumer sentiment. The survey indicated a second consecutive monthly decline in February, with a final reading showing a significant 10% decrease from January. This decline was twice as steep as the initial report earlier in the month.
The survey findings pointed to a loss of confidence in the economy among Americans, primarily driven by concerns over the potential price hikes resulting from Trump's tariffs. A separate poll released on Thursday echoed these sentiments, with 62% of US adults expressing dissatisfaction with Trump's efforts to address inflation.
Investor concerns were further exacerbated by the fear that weakened consumer sentiment could lead to a reduction in Americans' spending habits. Given that consumer spending accounts for more than two-thirds of the US economy, the implications of this trend are significant.
Overall, the market reaction to the economic report and consumer sentiment surveys underscores the growing unease among investors and the general public regarding the potential impact of inflation and trade policies on the US economy.
