NEWS BRIEFING
Stocks tumble amid worries over Trump’s effect on US economy
NEW YORK — U.S. stocks fell sharply Friday after reports showed that worries among consumers and businesses about President Donald Trump’s policies may be hitting the U.S. economy.
The S&P 500 sank 1.7% for its worst day in two months. The Dow Jones Industrial Average dropped 748 points, or 1.7%, and the Nasdaq composite tumbled 2.2%.
The losses accelerated through the day following several weaker-than- expected reports on the economy. One suggested that U.S. business activity is close to stalling, with growth slowing to a 17-month low. The preliminary report from S&P Global said activity unexpectedly shrank for U.S. services businesses, and many in the survey reported slumping optimism because of worries about Washington.
“Companies report widespread concerns about the impact of federal government policies, ranging from spending cuts to tariffs and geopolitical developments,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
A separate report said U.S. consumers are also preparing for higher inflation, in part because of potential tariffs that could raise prices of all kinds of imports. They’re broadly expecting prices to be 4.3% higher 12 months from now, which is a big jump from their forecast of 3.3% inflation last month, according to a survey by the University of Michigan.
Among U.S. households, though, a divide is evident underneath the surface. Expectations for inflation are rising for political independents and Democrats, while falling slightly for Republicans.
To be sure, the U.S. stock market is still up for the young year so far and is not far from its all-time high set this week. Virtually no one on Wall Street is forecasting a recession anytime soon. But Friday’s reports raise concerns about what’s been a remarkably resilient economy, and the losses on Wall Street were widespread.
Stocks of the smallest companies, whose profits can be more closely tied to the strength of the U.S. economy than big multinational rivals, fell more than the rest of the market. The Russell 2000 index of small stocks dropped a market-leading 2.9%.