Wall Street closed the week on a negative note, largely influenced by inflation and trade tariffs that led to a significant selloff last Friday.

Key Index Movements:

• Dow Jones Industrial Average: -444 points (-0.99%)
• S&P 500: -0.95%
• Nasdaq Composite: -1.36%

All major indices experienced weekly losses, indicating a volatile trading environment driven by tariff uncertainties and mixed economic data.

Key Market Drivers

Trump’s Tariff Escalation Weighs on Markets

President Trump unveiled new “reciprocal tariffs” to balance trade disparities, inciting fears of broader trade barriers and escalating costs for businesses. These fears began taking shape as early as last week after Trump’s announcement of 10% tariffs on Chinese goods.

Inflation Fears & Treasury Yields Spike

The University of Michigan’s Consumer Sentiment Index dropped to 67.8, falling short of expectations. One-year inflation expectations soared to 4.3%, marking the highest level since late 2023. Furthermore, treasury yields surpassed 4.5%, reflecting market anxiety regarding persistent inflation.

Market Volatility: A Week of Highs and Lows

Stocks initially fell after the tariff announcement, rebounded mid-week as the President paused levies on Canada and Mexico, only to plunge again on Friday amid renewed tariff plans.

What’s Next: An Important Week Ahead for Markets

This Wednesday will see the critical CPI Inflation Report, where Core CPI is predicted to rise 0.3% (MoM), up from December’s 0.2%. Additionally, Powell’s speech next week is likely to offer vital insights into the outlook for interest rates.

Final Thoughts

With inflation data, Powell’s remarks, and retail figures on the horizon, volatility in the market remains likely. Investors will be on the lookout for signs of alleviating price pressures as well as the Federal Reserve’s potential policy adjustments.