Inflation Fears Spark Risk-Off Sentiment As Magnificent 7 Drop: What's Driving Markets Friday?

Markets faltered on Friday, with Wall Street reeling as investors hurried to shed risk in the face of mounting inflation and tariff uncertainties.

The S&P 500 fell 2.1% by 1:30 p.m. trading in New York, on track to end the week with losses. The tech-heavy Nasdaq 100 tumbled 2.6%, and the Dow fell 1.7%.

All members of the Magnificent Seven group were in the red, with Amazon.com Inc. AMZN and Alphabet Inc. GOOGL marking the widest drops, both down 4.4%.

Earlier on Friday, the Fed's favorite inflation gauge – the core Personal Consumption Expenditure price index – rose 2.8% on a yearly basis in February, surprising estimates of 2.7%.

Investor anxiety deepened following the latest University of Michigan Survey of Consumers, which showed 5-year forward inflation expectations jumping to 4.1% — a 0.2-point increase from prior estimates and the highest reading since February 1993. As stocks fell in unison, a flight to safety ensued, sending gold up 1% to a record-breaking $3,090 per ounce. Treasury bonds also rallied, with yields declining across all maturities.

Price action in commodities was mixed with oil down 1% and natural gas up 2.4%. Sentiment in crypto also took a sharp hit, with Bitcoin BTC/USD down by 4% to below $84,000, flipping to weekly losses.

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Friday's Performance In Major US Indices, ETFs

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust SPY fell 2.1% to $555.41.
• The SPDR Dow Jones Industrial Average DIA eased 1.8% to $415.31.
• The tech-heavy Invesco QQQ Trust Series QQQ dropped 2.7% to $468.61.
• The iShares Russell 2000 ETF IWM fell 2.5% to $199.57
• The Utilities Select Sector SPDR Fund XLU outperformed, up 0.9%; the Consumer Discretionary Select Sector SPDR Fund XLY lagged, down 3.2%.

Friday’s Stock Movers

• Shares of Lululemon Athletica Inc. LULU sunk 15% in reaction to the company’s earnings report.
• Michigan-based automakers extended losses as investors asses the impact from tariffs. General Motors Co. GM fell 2% following a nearly 6% drop on Thursday. Ford Motor. Co. F fell 2.7% after a 3.9% drop a day earlier.
• Tesla Inc. TSLA erased Thursday’s gains and fell 3.5%.
• Crypto-related stocks plummeted, with Strategy Inc. MSTR down nearly 10%. Coinbase Global Inc. COIN fell over 7%, heading for the lowest close since mid-October 2024.

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Image created using artificial intelligence via Midjourney.