Wall Street tumbles as fresh data fuels inflation fear

Wall Street stocks ended sharply lower on Friday, with selloffs in Amazon, Microsoft and other technology heavyweights, after US data stoked fears of weak economic growth and high inflation as the Trump administration ratchets up tariffs.

US consumer spending rebounded less than expected in February while a measure of underlying prices increased the most in 13 months.

Adding to concerns, a University of Michigan survey showed consumers' 12-month inflation expectations soared to the highest in nearly two-and-a-half years in March, and that consumers expect inflation to remain elevated beyond the next year.

That data fuelled fears that a rush of tariff announcements from US President Donald Trump since taking office in January will boost prices of imported goods, drive inflation and deter the Federal Reserve from cutting interest rates.

Inflation and tariff worries sent shares of Wall Street's most valuable companies sharply lower, with Apple, Microsoft and Amazon all losing ground.

"One of the other big cautionary points for investors is that the inflation impact of tariffs has yet to show up in the data, which is why we believe this is the calm before the tariff storm, with inflation likely to head more north than south in the coming months," said Greg Bassuk, CEO at AXS Investments in New York.

According to preliminary data, the S&P 500 lost 113.03 points, or 1.99 per cent, to end at 5,580.28 points, while the Nasdaq Composite lost 483.30 points, or 2.71 per cent, to 17,320.73. The Dow Jones Industrial Average fell 724.84 points, or 1.71 per cent, to 41,576.15.

Interest rate futures suggest traders see a 76 per cent likelihood that the Fed will cut interest rates by 25 basis points by its June meeting, according to CME FedWatch.

With Friday's losses, the S&P 500 is down about nine per cent from its record high close on February 19. The Nasdaq is down around 14 per cent from its record high close on December 16.

"The problem is we don't know the rules and businesses really struggle with that," said Bob Doll, chief executive officer of Crossmark Investments.

"Part of the economic weakness we're experiencing and likely to see more of is a function of individuals and businesses saying, 'I'm not quite sure what tomorrow's going to bring, so I'll just be a little more cautious.'"

The CBOE volatility index rose three points to a one-week high.

A report noted that policymaker Mary Daly still views two interest-rate cuts this year as a "reasonable" expectation.

Trump's steadfast commitment to a 25 per cent tariff on auto imports, set to take effect next week, weighed on auto stocks for a second day, with General Motors and Ford both falling.

Attention now turns to a fresh round of tariffs the Trump administration is set to unveil on April 2, with Trump recently hinting that these measures might diverge from the straightforward tit-for-tat duties previously pledged.

Shares of Lululemon Athletica plunged after the sportswear maker lowered its annual forecasts, citing unpredictability surrounding tariffs.

Mining companies Harmony Gold and Gold Fields rallied on higher gold prices related to trade war concerns.

The S&P 500 is on track for its first quarterly decline in six quarters, while the tech-centric Nasdaq is set for its deepest quarterly drop since 2022.

UBS Global Wealth Management lowered its year-end target for the S&P 500 to 6,400 from 6,600.

Wolfspeed's slumped a day after the chipmaker appointed a new CEO amid its struggles to improve its financial position.