Friday Afternoon Coffee - Markets Update - 28 Mar 2025 - Wall Street Sinks as Hot Inflation Data Fuels Tariff Anxiety; Gold Hits New High

Markets Update: U.S. stocks experienced a significant decline on Friday, with all three major indexes recording losses due to core inflation data that exceeded expectations and increasing uncertainty regarding President Donald Trump's tariff policy, which unsettled the markets. At the same time, gold soared to a new record high as investors turned to it for safety amidst growing worries about inflation and a potential trade war.

Global Markets Roundup: 28 March 2025

The Commerce Department announced that the core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's favored measure of inflation, increased by 0.4% in February, exceeding predictions. Headline inflation rose by 0.3%, matching expectations, while consumer spending recovered after a drop in January. Additionally, University of Michigan data indicated a decline in consumer sentiment in March, heightening worries that inflation and policy uncertainty are eroding confidence.

Stocks Tumble, Led by Tech and Consumer Names

Dow Jones Industrial Average: -503.90 pts (-1.19%) to 41,795.80
S&P 500: -79.13 pts (-1.39%) to 5,614.18
Nasdaq Composite: -349.44 pts (-1.96%) to 17,454.59

Rate-sensitive bank stocks fell more than 2%, while consumer discretionary names took a hit. Lululemon (LULU) plunged 14.9% after cutting its full-year outlook, citing tariff-related uncertainty. The broader consumer discretionary sector dropped over 2.5%.

Wolfspeed (WOLF) shares collapsed 48%, hitting their lowest level since 1998 after announcing a new CEO amid ongoing financial struggles.

Tariffs Drive Market Jitters

Trump’s announcement of a 25% tariff on imported cars and auto parts, set to begin April 3, weighed heavily on automakers for a second straight day:

General Motors and Ford both fell over 2%
EU automakers and Germany’s DAX index slid as well

The President has also hinted that the April 2 reciprocal tariff package could deviate from earlier tit-for-tat strategies, intensifying global trade tensions. Reports suggest the EU is weighing concessions to avoid further escalation.

UBS Cuts S&P 500 Forecast

UBS Global Wealth Management lowered its year-end S&P 500 target from 6,600 to 6,400, citing persistent inflation, uncertainty over Fed policy, and rising geopolitical risk.

The CBOE Volatility Index (VIX) jumped 1.63 points to a one-week high as investors braced for a turbulent quarter-end. The S&P 500 is headed for its first quarterly decline in six quarters, while the Nasdaq is on track for its steepest quarterly drop since 2022.

Dollar Slips Despite Firm Inflation

Despite firmer inflation data, the U.S. dollar eased, as traders awaited clarity on Trump’s tariff plans:

Dollar Index (DXY): -0.27% to 104.27
EURUSD : +0.17% to $1.0819
USD/JPY: -0.57% to 150.19
GBP/USD: +0.08% to $1.2955

In Europe, data showed weaker-than-expected inflation in France and Spain, rising unemployment in Germany, and slumping sentiment in Italy—supporting the case for further ECB rate cuts.

Commodities: Gold Soars, Grains Dive

Gold surged past $3,080/oz for the first time before settling slightly lower:

Spot gold: +1.19% to $3,055.33, after hitting a record $3,059.30
Goldman Sachs raised its forecast to $3,300 amid strong ETF flows and central bank demand

Crude oil slipped:

WTI (May): -0.60% to $69.92/bbl
Brent: -0.33% to $74.03/bbl

Agricultural commodities were mixed:

Corn (CBOT): -0.44% to $4.48/bushel, lowest since Dec. 20
Wheat: -1.79% to $5.22½/bushel, lowest since July 31
Soybeans: -0.27% to $10.14/bushel

Cotton fell 21 to 32 points, pressured by a weaker crude market and rising dollar. Sugar also declined as Brazilian weather improved. Cocoa continued to consolidate, while arabica coffee fell to its lowest level in over a month.

Looking Ahead

Investors are now anticipating significant speeches from Federal Reserve officials Michael Barr and Raphael Bostic, who might provide clues on whether two rate cuts are still expected this year—a perspective shared by policymaker Mary Daly on Friday. As April nears, markets remain tense due to the impending April 2 tariff announcement and April 3 auto tariffs, which pose a risk of intensifying the global trade conflict.

Looking forward, refer to the economic calendar below to see the upcoming events scheduled for today and the rest of the week.

General news - Information source from multiple newswires.

The article and the data is for general information use only, not advice!

The Trade Academy Team