Wall Street witnessed a brutal selloff on Friday, March 28, as renewed fears of inflation, collapsing consumer confidence, and skepticism about artificial intelligence (AI) investments came up against continued uncertainty over President Donald Trump’s bold tariff policies.
The S&P 500 dropped 2 per cent, marking its second-worst day of the year, while the tech-abundant Nasdaq fell 2.7 per cent. The Dow Jones Industrial Average lost 715 points, a 1.7 per cent decline, putting all three major indexes on track for a fifth weekly loss in six weeks.
It was all sparked early Friday when the Bureau of Economic Analysis reported that the Personal Consumption Expenditures (PCE) index, a key gauge often used by the Federal Reserve to watch inflation and deflation, remained steady at 2.5 per cent year-on-year in February. However, the core PCE, excluding volatile food and energy prices, rose to 2.8 per cent from 2.7 per cent in January, a higher rise than anticipated, suggesting an inflationary situation above the Fed’s 2 per cent target. A separate University of Michigan study increased the jitters, revealing a 12 per cent drop in consumer confidence in March, coupled with more talk of unemployment and plummeting hopes for financial improvement.
Tech stocks tumble amid tariff fears
Tech stocks, once market darlings, saw the biggest selloffs. Nvidia, the leader in AI chipmaking, saw shares drop nearly 2 per cent despite just having unveiled their next-generation AI chips. The stock is now down 27 per cent from its January peak, losing a jaw-dropping $1 trillion in value.
Microsoft stocks, meanwhile, came under scrutiny after a report suggested it was reducing spending on its AI data centre plans, although the company promises it still had solid capacity to meet demand.
Broader doubts about AI investments coupled with dropping consumer sentiment and Trump’s tariffs appear to be dragging everything down. Since Trump’s November election, the S&P 500 has fallen 5.9 per cent and the Nasdaq 8.7 per cent, reflecting unease over his aggressive strategies. Friday also saw sharp declines in stocks for Google (-4.4 per cent), Amazon, and Lululemon (-15 per cent), the latter citing a ‘cautious consumer’. As investors dumped shares across tech, autos, and airlines, the debut of Nvidia-backed AI venture CoreWeave flopped, with its IPO opening well below expectations, a worrying sign of failing enthusiasm for AI in these turbulent times.
