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Investing.com--The S&P 500 gave up gains to close lower Friday, in a ugly reversal as the White House confirmed that tariffs on Mexico, Canada, and China would begin on Saturday.
At 4:00 p.m. ET (21:00 GMT), the Dow Jones Industrial Average fell 337 points , or 0.8%, the S&P 500 index fell 0.5%, and the NASDAQ Composite fell 0.3%, the latter was up more than 1% intraday.
Tariff worries spark reversal
White House press secretary Karoline Leavitt confirmed that the tariffs will begin on Saturday on America's three largest trading partners including Canada, Mexico and China.
The U.S. is set to impose 25% tariffs on Mexican and Canadian goods as well as a 10% tariff on Chinese goods. The confirmation of tariffs to come in 24 hours caught markets off guard as some had been hoping that Trump wouldn't follow through on his earlier threat to impose tariffs on Feb. 1.
"We do not expect that permanent country-level tariffs will be actually made effective on February 1 on Mexico and Canada," Macquarie said in a earlier note.
PCE inflation accelerates in December
The PCE price index, the Federal Reserve's favorite gauge of inflation, increased by 0.3% on a monthly basis last month, up from 0.1% in November, while on an annual basis the number came in at 2.6%, compared with 2.4% in the prior month.
The core reading, stripping out more volatile food and energy components, was 0.2% month-on-month and 2.8% annually.
Meanwhile, personal spending -- a key component of economic activity -- rose by 0.7% month-on-month, faster than an upwardly-revised level of 0.6% in November, as US consumers were buoyed by a solid labor market and ongoing wage growth. Forecasts had called for an uptick of 0.5%.
The Fed, which slashed interest rates by a full percentage point last year, closely tracks the PCE price measures as it gauges monetary policy. Earlier this week, officials chose to leave rates unchanged and signaled that they would adopt a wait-and-see approach to further borrowing cost reductions.
Policymakers have recently flagged uncertainty around the outlook for the wider economy, particularly the impact of President Donald Trump's plans for tariffs, taxes and immigration. Some economists have said his moves could refuel inflationary pressures in the world's largest economy.
Apple falls after Q1 results
The major quarterly corporate earnings season continues as the week comes to an end.
Apple (NASDAQ:AAPL) stock closed lower as the broader market selloff wiped out its gains even after the company said it now expects sales to grow in the low- to mid-single digits in its fiscal second quarter.
The rosier outlook helped to assuage some worries around sales for Apple's flagship handset, which dropped marginally and missed estimates in its key holiday shopping quarter, due in part to the firm's new AI features not being available in some markets. Still, CEO Tim Cook said the enhancements, known as Apple Intelligence, are boosting sales.
Elsewhere, Exxon Mobil (NYSE:XOM) stock fell 2.5% oil giant beat estimates for fourth-quarter profit as higher oil and gas production offset lower oil prices and weaker refining margins.
Colgate-Palmolive (NYSE:CL) stock fell 4.6% after the consumer products giant reported fourth-quarter results that fell short of analyst expectations on revenue.
AbbVie (NYSE:ABBV) stock soared nearly 5% after the drugmaker forecast 2025 profit above estimates, as strong sales of its newer immunology drugs Skyrizi and Rinvoq make up for a steep decline in those of Humira, its flagship rheumatoid arthritis drug that now faces stiff competition.
Deckers Outdoor (NYSE:DECK) shares plunged 20% as full-year revenue guidance came in below expectations.
(Peter Nurse, Ayushman Ojha contributed to this article.)
