US Market Crashed After Core PCE Index Hints Delay In Rate Cut; Dow Jones, S&P 500, Nasdaq Fall By 1-2%

US Market Update: Wall Street crashed on Friday, with Dow Jones, S&P 500 and Nasdaq Composite toppling by 1% to 2%. The performance comes after US' Personal Consumption Expenditures (PCE) price index surged 0.3% in February 2025, which came in hotter-than-expected, dampening investors mood. Concerns of delay in rate cut heightened as Fed considers PCE index for its 2% inflation objective.

Dow Jones: The Dow Jones Industrial Average or DJIA plunged by 502 points, or 1.2% to trade at 41,797.70. The index ranged between 41,698.74 to 42,258.15.

S&P 500: The Standard and Poor's 500 dropped by 74.16 points or 1.30% to perform at 5,619.15. Broadly, the index traded between 5,599.64 to 5,685.89.

Nasdaq Composite: The tech-heavy index Nasdaq nosedived by 345.52 points or 1.94% to perform at 17,456.56. Index traded between 17,403.48 to 17,763.28.

Explaining the performance, Trading Economics highlighted that US stocks traded sharply lower on Friday, with the S&P 500 down 1.4%, the Nasdaq falling 1.9%, and the Dow Jones sinking 500 points, as investors continue to weigh the impact of new tariffs while digesting the latest PCE report. Core PCE prices rose 0.4% on the month, above forecasts, pushing the annual rate higher to 2.8%, in a sign of rising price pressures.

Trading Economics data added, personal spending increased less than expected. Meanwhile, fresh reciprocal tariffs are set to take effect next week. Consumer discretionary was by far the worst performer while the utilities sector outperformed. Megacaps were mixed, with Apple (-0.5%), Microsoft (-0.4%), Amazon (-1.1%), Meta (-0.4%) and Alphabet (-0.6%) trading in the red while Tesla shares were little changed and Nvidia gained more than 1%. On the week, the three major averages are on track to book small gains, a second straight winning week.

Despite the expectation of a delay in the Fed rate cut ahead, US dollar index fell marginally to below 104, halting its 3-week high zone. The downfall in dollar can be attributed to economic slowdown fear. Meanwhile, the 10-year treasury yield also slipped to 4.29%, correcting from its 1-month high zone.

With the April month just around the corner, potential trade war due to Trump's uncertain tariffs continues to be a key concern.

US PCE Index:

From the preceding month, the PCE price index for February increased 0.3 percent. Excluding food and energy, the PCE price index increased 0.4 percent, as per BEA data. Further, from the same month one year ago, the PCE price index for February increased 2.5 percent. Excluding food and energy, the PCE price index increased 2.8 percent from one year ago.

Data from BEA revealed that the personal income in USA climbed to $194.7 billion (0.8 percent at a monthly rate) in February. Disposable personal income (DPI)-personal income less personal current taxes-increased $191.6 billion (0.9 percent) and personal consumption expenditures (PCE) increased $87.8 billion (0.4 percent).

FAQS:

Question : Why are U.S. stocks falling?

Answer : U.S. stocks are falling due to discouraging updates on inflation and uncertainty surrounding President Trump's escalating trade war.,

Question : What impact did Lululemon have on the market?

Answer : Lululemon's stock tumbled 15%, leading the market lower despite reporting stronger profits, as it warned of slowing revenue growth due to consumer concerns about inflation.,

Question : What are consumer sentiments regarding the job market?

Answer : Two out of three consumers surveyed expect unemployment to worsen in the year ahead, indicating a deterioration in consumer sentiment.,

Question : How is inflation affecting the Federal Reserve's decisions?

Answer : The Federal Reserve is likely to hold interest rates steady due to inflation moving up more than expected, complicating economic support measures.,

Question : What are the predictions for stock markets as tariffs approach?

Answer : Stock markets worldwide are expected to remain shaky as an April 2 deadline approaches for more tariffs announced by President Trump.