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Investing.com -- Stocks tumbled on Friday as fresh US economic data fueled investor concerns over slowing growth and persistent inflation, prompting a flight to safer assets.
Selling pressure accelerated into the close, with traders hesitant to hold positions ahead of the weekend amid uncertainty over potential policy moves from the Trump administration, which has introduced a wave of tariffs and other market-shifting proposals in its first month.
The Dow Jones Industrial Average dropped 748.63 points (1.69%) to 43,428.02, extending its two-day loss to about 1,200 points. The S&P 500 fell 1.71% to 6,013.13, retreating further after hitting a record midweek, while the Nasdaq Composite sank 2.2% to 19,524.01.
A series of economic reports added to market jitters, driving investors toward bonds and pushing yields lower.
The University of Michigan’s consumer sentiment index slid to 64.7, down nearly 10%, as respondents cited inflation concerns tied to potential new tariffs.
The five-year inflation outlook hit 3.5%, its highest since 1995. Meanwhile, existing home sales declined more than expected to 4.08 million units, and the US services PMI dipped into contraction territory for February, according to S&P Global.
For the week, the S&P 500 lost 1.7%, while the Dow and Nasdaq both dropped 2.5%.
This week is set to bring a volley of fresh economic data, offering insight into growth and inflation trends after flash PMI readings pointed to a sharp slowdown and rising cost pressures.
Among the highlights are revised fourth-quarter GDP figures and the PCE price index, the Federal Reserve’s preferred inflation measure, set for release on Friday.
Recent consumer price inflation data for February came in higher than expected, but analysts note that the underlying components, along with producer price data, suggest core PCE inflation may not be as alarming. Still, markets remain firm in their expectations that the Fed will not cut interest rates before fall, with a 25 basis-point reduction fully priced in for September.
“The bigger picture is that progress on lowering inflation has stalled in recent months, with the threat of various tariffs adding to concerns,” Investec (LON:INVP) economist Philip Shaw said in a note.
Additional releases this week include the Conference Board’s consumer confidence index on Tuesday, followed by the second estimate of fourth-quarter GDP, January durable goods orders, and weekly jobless claims on Thursday. Housing data will feature the Case-Shiller home price index on Tuesday and January new home sales on Wednesday.
It's the Nvidia earnings week
This week will also be eventful in terms of earnings reports, with NVIDIA Corporation (NASDAQ:NVDA) set to capture most of the spotlight.
The chip giant is scheduled to report earnings on Wednesday after the market close, with analysts largely bullish on the company’s stock.
Nvidia is expected to report record quarterly revenue of $38.32 billion, marking a 73% increase from the same period last year, according to estimates from Visible Alpha. Net income is projected to rise to $21.08 billion, compared to $12.84 billion a year ago.
UBS analysts, who kept their price target at $185, noted that "investor expectations having crept up a bit recently" and pointed to supply chain improvements that could drive stronger sales of Nvidia’s Blackwell line. The firm nearly doubled its forecast for Blackwell’s contribution to fourth-quarter revenue, raising it to $9 billion from a previous estimate of $5 billion.
Other noteworthy companies that will report this week include The Home Depot (NYSE:HD), Salesforce (NYSE:CRM), Snowflake (NYSE:SNOW), HP (NYSE:HPQ), and Intuit (NASDAQ:INTU), among others.
What analysts are saying about US stocks
JPMorgan: “While we have a Neutral stance on US equities this year in our regional DM portfolio, rather than bullish, given less attractive Tech/Growth style outlook, we do not believe that the US will necessarily underperform from here for the rest of the year. We do not advocate an Underweight (UW) US position as we see a still wide growth and earnings differential vs the rest, with tariffs escalation a wild card.”
RBC Capital Markets on its year-end S&P 500 target: “Our Valuation/Earnings and Economic test do continuously shift as macro assumptions about the current year evolve. Right now, the median outcome of our five models is 6,511, slightly below our 6,600 price target. We consider this to be a rounding error and do not see a need to change our price target at this time. We also note that since publication of our price target and YE 2024, that our sentiment model has moved into a range that’s slightly more favorable for the S&P 500 on a 12-month time frame.”
Morgan Stanley (NYSE:MS): “We recommend investors favor the quality and size factors as a hedge against these dynamics. We stick with our Consumer Services over Goods trade amid the tariff overhang and stronger relative earnings revisions/ pricing power for Services.”
“We think it's premature to conclude the rotation away from the US is sustainable mainly because of the higher quality nature of the median stock in the US, and the fact that the S&P 500 still offers the strongest EPS growth expectations of its global peers.”
