By STAN CHOE, Associated Press Business Writer
NEW YORK (AP) — U.S. stocks are falling Friday following discouraging updates on inflation and how much U.S. households may be willing to spend given all the uncertainty about President Donald Trump’s escalating trade war.
The S&P 500 was down 1% in morning trading and on track to wipe out the last of what had been a winning week. If it does, it would be the fifth losing week in the last six for the index.
The Dow Jones Industrial Average was down 388 points, or 0.9%, as of 10:15 a.m. Eastern time, and the Nasdaq composite was 1.4% lower.
Lululemon Athletica tumbled 14.8% to help lead the market lower, even though the seller of athletic apparel reported a stronger profit for the latest quarter than analysts expected. It warned that its revenue growth may slow this upcoming year, in part because “consumers are spending less due to increased concerns about inflation and the economy,” said CEO Calvin McDonald.
Lululemon also said tariffs and shifting foreign-currency values may account for about half its expected decline in a key measure of performance: how much profit it can squeeze out of each $1 of revenue.
Oxford Industries, the company behind the Tommy Bahama and Lilly Pulitzer brands, likewise reported stronger results for the latest quarter than expected but still saw its stock fall 6%. CEO Tom Chubb said it saw a “deterioration in consumer sentiment that also weighed on demand” beginning in January, which accelerated into February.
They’re discouraging data points when one of the main worries hitting Wall Street is that Trump’s trade war may cause U.S. households and businesses to freeze their spending. Even if the tariffs end up being less painful than feared, all the uncertainty may filter into changed behaviors that hurt the economy.
A report Friday morning showed all types of U.S. consumers are getting more pessimistic about the future, including Republicans, independents and Democrats. Two out of three consumers surveyed by the University of Michigan expect unemployment to worsen in the year ahead. That’s the the highest reading since 2009, and it raises worries about the job market that’s been the linchpin keeping the U.S. economy solid.
Another report released in the morning also raised concerns after it showed a widely followed, underlying measure of inflation was a touch worse last month than economists expected. The data followed reports on other measures of inflation for the month, but this one is what the Federal Reserve tracks most closely as it decides what to do with interest rates.
The report also showed that an underlying measure of how much income Americans are making, which excludes government social benefits and some other items, “has been treading water for the last three months,” said Brian Jacobsen, chief economist at Annex Wealth Management.
“Households aren’t in a good place to absorb a little tariff pain,” he said. “The Fed isn’t likely to run to the rescue either as inflation moved up more than expected in February.”
The Fed has been keeping its main interest rate on hold this year after cutting it sharply in late 2024, in part because of worries about inflation remaining higher than its 2% target. While more cuts to interest rates would give the economy and financial markets a boost, they would also put upward pressure on inflation.
Stock markets worldwide will likely remain shaky as an April 2 deadline approaches for more tariffs. That’s what Trump has called “Liberation Day,” when he will roll out tariffs tailored to the United States’ trading partners. In each case, he said the “reciprocal” tariff will match the burden the other country places on the United States, including things like value-added taxes.
In stock markets abroad, indexes fell sharply in Japan and South Korea as auto makers felt more pressure following Trump’s announcement he plans to impose 25% tariffs on auto imports. South Korea’s Hyundai Motor fell 2.6% in Seoul, while Honda Motor fell 2.6%, and Toyota Motor sank 2.8% in Tokyo.
On Wall Street, General Motors sank 2.2%, and Ford Motor fell 2.3%. Even U.S. automakers selling vehicles in the country can feel the pain of such tariffs because their supply chains are spread throughout North America. Trump says he wants more manufacturing to take place within the United States.
Thailand’s SET lost 1% after a powerful earthquake centered in Myanmar rattled the region, causing the prime minister to declare a state of emergency for the capital, Bangkok.
In the bond market, the yield on the 10-year Treasury tumbled to 4.27% from 4.38% late Thursday. It tends to fall when expectations for either U.S. economic growth or inflation are on the wane.
AP Writers Jiang Junzhe and Matt Ott contributed.
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