U.S. and Canadian stocks ended sharply lower on Friday after U.S. data stoked fears of weak economic growth and high inflation as the Trump administration ratchets up tariffs.
U.S. consumer spending rebounded less than expected in February while a measure of underlying prices increased the most in 13 months. Adding to concerns, a University of Michigan survey showed consumers’ 12-month inflation expectations soared to the highest in nearly 2-1/2 years in March, and they expect inflation to remain elevated beyond the next year.
That data fueled fears that a rush of tariff announcements from U.S. President Donald Trump since taking office in January will boost prices of imported goods, drive inflation and deter the Federal Reserve from cutting interest rates.
Inflation and tariff worries sent shares of Wall Street’s most valuable companies sharply lower, with Apple falling 2.7%, Microsoft losing 3% and Amazon off 4.3%.
“One of the other big cautionary points for investors is that the inflation impact of tariffs has yet to show up in the data, which is why we believe this is the calm before the tariff storm, with inflation likely to head more north than south in the coming months,” said Greg Bassuk, CEO at AXS Investments in New York.
Added Bob Doll, chief executive officer of Crossmark Investments: “The problem is we don’t know the rules and businesses really struggle with that. Part of the economic weakness we’re experiencing and likely to see more of is a function of individuals and businesses saying, ‘I’m not quite sure what tomorrow’s going to bring, so I’ll just be a little more cautious.’”
The S&P 500 declined 1.97% to end at 5,580.94 points. The Nasdaq fell 2.70% to 17,322.99 points, while the Dow Jones Industrial Average dropped 1.69% to 41,583.90 points. For the week, the S&P 500 fell 1.5%, the Nasdaq declined 2.6%, and the Dow fell about 1%.
The S&P/TSX composite index ended down 401.91 points, or 1.6%, at 24,759.15, its lowest closing level since March 18 and its biggest decline since March 4. For the week, the index was down 0.8%.
In economic data Friday, Canadian GDP rose 0.4% in January but a preliminary estimate showed activity flatlining in February. Trump and Prime Minister Mark Carney Friday morning had a conversation that both men described as productive, although the Canadian leader said Ottawa would be imposing retaliatory tariffs next week as promised.
On Wednesday, Trump announced a 25% tax on imported vehicles. Autos are Canada’s second-largest export.
The technology sector took the brunt of the losses in Canada as well in Friday trading, falling 3%, with e-commerce company Shopify Inc ending 5.7% lower.
The materials group, which includes metal mining shares, fell 1.7%. It was weighed down by a 15.8% drop in the shares of Aya Gold & Silver Inc after the company reported quarterly results. Consumer discretionary fell 2.2%, with auto parts suppliers adding to their recent declines and shares of Restaurant Brand International losing 6.1%.
Industrials were down 2.2% as railroad shares declined and heavily weighted financials ended 1.6% lower.
On Wall Street, ten of the 11 S&P 500 sector indexes declined, led lower by communication services, down 3.81%, followed by a 3.27% loss in consumer discretionary.
Interest rate futures suggest traders see a 76% likelihood that the Fed will cut interest rates by 25 basis points by its June meeting, according to CME FedWatch.
With Friday’s losses, the S&P 500 is down about 9% from its record high close on February 19. The Nasdaq is down around 14% from its record high close on December 16.
Among U.S. stocks, CoreWeave’s shares opened nearly 3% below their offer price in the Nvidia-backed artificial intelligence infrastructure company’s Nasdaq debut on Friday. That weak debut could crush hopes of a meaningful recovery in stock market listings, especially as equity markets grapple with tariff-related turmoil.
Shares of Lululemon Athletica plunged 14% after the sportswear maker lowered its annual forecasts, citing unpredictability surrounding tariffs.
Trump’s steadfast commitment to a 25% tariff on auto imports weighed on U.S. auto stocks for a second day, with General Motors down 1.1% and Ford losing 1.8%.
Mining companies Harmony Gold and Gold Fields rallied 9.5% and 4.5%, respectively, on higher gold prices related to trade war concerns.
Attention now turns to a fresh round of tariffs the Trump administration is set to unveil on April 2, with Trump recently hinting that these measures might diverge from the straightforward tit-for-tat duties previously pledged.
The S&P 500 is on track for its first quarterly decline in six quarters, while the tech-centric Nasdaq is set for its deepest quarterly drop since 2022.
UBS Global Wealth Management Friday lowered its year-end target for the S&P 500 to 6,400 from 6,600.
Declining stocks outnumbered rising ones within the S&P 500 by a 4.5-to-one ratio. The S&P 500 posted 10 new highs and 23 new lows; the Nasdaq recorded 35 new highs and 358 new lows. Volume on U.S. exchanges was relatively light, with 14.3 billion shares traded, compared to an average of 16.2 billion shares over the previous 20 sessions.
Reuters, Globe staff