Stock market today: S&P 500 slumps as fresh tariff, inflation jitters bite

Published 2025-02-06, 06:54 p/m
© Reuters

Investing.com - The S&P 500 closed sharply lower Friday as investors digested a cooler-than-anticipated jobs report and sharp uptick in inflation expectations just as President Donald Trump announced fresh tariff measures set for next week.  

At 4:00 p.m. ET (21:00 GMT), the Dow Jones Industrial Average fell 443 points, or 1%, the S&P 500 index slipped 0.9%, and the Nasdaq Composite decreased 1.4%.

Trump warns of reciprocal tariffs on many countries next week 

President Donald Trump warned on Friday of plans to impose higher tariffs next week on goods imported into the U.S to match the rates that trading partners impose on American exports.

While it wasn’t clear which countries would be targeted, the news stoked fresh fears about a brewing global trade war, further curbing risk sentiment.

Ahead of the tariffs, the EU has already attempted to offer concessions that could lead to deal. Bernd Lange, the head of the trade committee in the European parliament, told the Financial Times on Friday that he bloc was prepared to cut its 10% import tax on cars in the EU to get closer to the 2.5% levy charged by the U.S..

Inflation expectations jump, payrolls misses expectations to cement Fed pause bets

A gauge of consumer sentiment from the University of Michigan unexpectedly fell in February, but one-year inflation expectations moved up to 4.3% from 3.3% -- the highest reading since 2023.

The survey may indicate that consumers are becoming increasingly concerned that Trump’s tariff policies could refuel price growth and dent broader economic activity, analysts at Capital Economics noted.

The update on inflation expectations arrived just as data showed nonfarm payrolls rose by 143,000 in January, down from an upwardly-revised level of 307,000 in December, missing forecast of 169,000.

Adding to inflation worries, the jobs data also showed average hourly earnings jumped by 0.5% in January, compared with expectations an unchanged pace of 0.3%.

"Recent comments from Fed officials show that they are in "no hurry" to cut rates again after reducing the fed funds rate target 100 bps since September. Nothing in this data suggests that they should hasten," Jefferies said in a Friday note.

Amazon sinks on weak guidance

Amazon (NASDAQ:AMZN) stock fell 4% after the e-commerce major forecast first quarter 2025 sales of $151 billion to $155.5 billion, weaker than estimates of $158.33 billion.

While the company did report stronger-than-expected earnings for the final quarter of 2024, its top line is expected to face increased pressure from a stronger dollar, which may stymie e-commerce returns from overseas markets. 

Amazon’s cloud unit - Amazon Web Services - also marked weaker-than-expected earnings, joining its Wall Street peers such as Microsoft (NASDAQ:MSFT) and Google (NASDAQ:GOOGL) in reporting weak cloud growth. 

This trend raised some questions about the returns on investment from artificial intelligence, especially as Wall Street’s internet giants flagged plans to ramp up their AI-related capital spending in 2025.

Elsewhere, Tesla (NASDAQ:TSLA stock fell 3.4% after the automaker’s sales of China-made electric vehicles fell 11.5% to 63,238 units in January from a year earlier, data from the China Passenger Car Association showed on Friday.

Pinterest (NYSE:PINS) stock gained 19% after the social media service reported a strong holiday-quarter performance, posting better-than-anticipated revenue of $1.15 billion - crossing the $1 billion milestone for the first time ever.

Affirm Holdings (NASDAQ:AFRM) stock soared nearly 22% after the provider of buy now, pay later loans posted a surprise quarterly profit on the back of a strong holiday shopping season and forecast an upbeat annual revenue.

(Scott Kanowsky, Peter Nurse and Ambar Warrick contributed to this article.)

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