NEW YORK: US stocks tumbled on Friday (Feb 21), extending their selloff in the wake of dour economic reports and closing the book on a holiday-shortened week fraught with new tariff threats and worries of softening consumer demand.
All three major US stock indexes moved decisively lower on the heels of the data, and continued their slide into afternoon trading.
The S&P 500 suffered its largest single-day percentage drop since Dec 18, as did the small cap Russell 2000.
For the week, all three indexes lost ground, with the Dow registering its steepest Friday-to-Friday plunge since mid-October.
“I don’t like all this red on a Friday,” said Greg Bassuk, CEO at AXS Investments in New York. “We’re seeing consumer sentiment, tariffs and corporate earnings having leap-frogged AI and technology as the primary drivers of market direction.”
Economic data showed US business activity decelerating and consumer sentiment deteriorating, with survey participants expressing an increasingly gloomy outlook in the face of economic unknowns.
The data comes on the heels of Walmart’s disappointing guidance on Thursday, which sparked fears of dampening consumer demand.
US businesses’ optimism has “evaporated”, according to PMI commentary provided by S&P Global’s chief economist Chris Williamson, amid “a darkening picture of heightened uncertainty”.
“Uncertainty is the new investor narrative,” Bassuk added. “It’s sparking the volatility that we’ve seen this week.”
“We’re anticipating that the uncertainty and the volatility is going to remain at least through the end of this first quarter.”
Economically sensitive sectors, such as Dow Transports, chips, smallcaps, housing, and consumer discretionary slid more than 2 per cent.
Megacap momentum stocks dropped 2.9 per cent, and every stock in the “Magnificent Seven” ended in negative territory, with Nvidia, due to report earnings next week, tumbling 4.1 per cent.
The CBOE volatility index closed at its highest level since Feb 3.
This week, US President Donald Trump said he will soon announce new tariffs covering lumber and forest products, in addition to previously announced plans to impose duties on imported cars, semiconductors and pharmaceuticals.
The Dow Jones Industrial Average fell 748.63 points, or 1.69 per cent, to 43,428.02, the S&P 500 lost 104.39 points, or 1.71 per cent, to 6,013.13 and the Nasdaq Composite lost 438.36 points, or 2.20 per cent, to 19,524.01.
Among the 11 major sectors of the S&P 500, all but consumer staples ended lower, with consumer discretionary and tech suffering the steepest percentage losses.
