The U.S. stock market closed lower on Friday, March 28, 2025, as signs of an economic slowdown and fears of inflation fueled by a trade war took center stage.
The Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, came in hotter than expected. Core PCE rose 0.4% month-over-month and 2.8% year-over-year, beating forecasts.
Meanwhile, real consumer spending in February grew by just 0.1%, falling short of expectations and signaling caution among households.
Adding to the gloom, the University of Michigan’s March Consumer Sentiment Index dropped to its lowest level in over two years, while long-term inflation expectations hit a 32-year high.
President Trump’s expanding tariff policies are stoking consumer fears of rising prices. On Friday, Trump said he had a “very good talk” with Canada’s Prime Minister but doubled down, insisting tariffs on Canada “will absolutely happen.”
In a post-market interview aboard Air Force One, he teased “pharma tariffs coming soon” while hinting auto tariffs might be delayed for negotiation.
Economists surveyed by Bloomberg are slashing U.S. growth forecasts, citing relentless trade policy shifts that breed uncertainty, weaken consumer spending, and curb business investment. The S&P 500 fell 1.97%—reflecting the market’s unease—
while Wolfspeed saw a jaw-dropping 52% plunge a day after naming a new CEO to shore up its finances.
Market experts weighed in:
- Brett Kenwell (eToro): “The big worry is inflation staying sticky even as the economy slows. But it’s too early to cry ‘stagflation’ unless things get much worse.”
- Michael O’Rourke (JonesTrading): “Investors are still digesting the auto tariff fallout.”
- Jim Baird (Plante Moran Financial Advisors): “It’s hard to plan when no one knows what’s next.”
- Mark Hackett (Nationwide): “The road to recovery looks bumpy, and volatility will stick around until policy uncertainty clears. Historically, April brings a seasonal tailwind, but this year? We’ll see.”
Bank of America, citing EPFR Global data, noted the largest weekly outflow from U.S. equity funds this year, a sign of rattled investors pulling back. Amid this chaos, discretionary spending could take a hit, dragging down the broader economy and corporate earnings.
