Stocks Slide on Inflation Concerns and Trade Policy Turbulence

Markets are under pressure as US stocks face declines driven by weak consumer sentiment and inflation worries. Trade policies are instilling fear of economic slowdown, affecting key sectors and overall investor sentiment.

Date: 29-03-2025

AI Rating: 4

Market Overview: The recent market downturn stems from concerns over the economic implications of US trade policies and rising inflation. The S&P 500 is down by 1.53%, reflecting significant investor apprehension. The downward revision of consumer sentiment to a 2-1/3 year low exacerbates fears that household demand will weaken.

Key Economic Indicators: The US personal spending growth of 0.4% in February was below expectations, signaling potential weakness in consumer demand. This was compounded by the rise in the core PCE index, suggesting inflation may persist longer than anticipated. The inflation expectations revised upward by the University of Michigan further illustrate unease among consumers regarding future price increases, which can dampen spending.

Fed Commentary: Recent statements from the Federal Reserve, indicating inevitable inflation increases due to tariffs, contribute to a bearish outlook. The perception that US tariffs will disrupt economic growth and corporate earnings is prevalent among investors.

Sector Impact: The technology sector faced substantial selling pressure, with the Magnificent Seven stocks witnessing declines over 2% to 3% each, leading to a significant drag on the overall market. Chip makers and travel-related stocks are also underperforming amid economic fears.

EPS Forecasts: Companies like Lululemon Athletica reported weaker-than-expected forecasts, with an EPS projection below market consensus, potentially affecting valuations. This decline could lead to investor sentiment turning negative towards the stock.

Overall, the current market sentiment remains bearish due to subdued economic signals with inflation at the forefront of investor concerns. The potential for declining consumer demand alongside rising costs necessitates a cautious approach moving forward.

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