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(Bloomberg) -- Stocks got hammered, bonds climbed and gold hit a record high, following signs of weakness in the main engine of the US economy and worries that inflation could gain further traction amid a trade war.
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With just one more session left before the end of a quarter that’s set to be the S&P 500’s worst since 2022, the gauge fell 2%. Data showed a plunge in US consumer sentiment and a surge in long-term inflation expectations. That was after another report underscored tepid spending and a pick-up in prices ahead of next week’s big US tariff rollout. A gauge of tech megacaps slumped 3.5%. The yield on 10-year Treasuries sank 10 basis points to 4.26%.
To Bret Kenwell at eToro, the biggest worry is that inflation will remain elevated amid a notable slowdown in the economy.
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“And while that risk may not be the base case right now, any traction it gains could further weigh on investor sentiment,” he said. “But unless there’s a larger deterioration in the economy, it’s too soon to jump on the stagflation train.”
The Nasdaq Composite Index lost 2.7%, notching a drop of at least 2% in March for the fifth time — the most for a single month since the bear market in June 2022, according to Bespoke Investment Group. The Dow Jones Industrial Average slipped 1.7%. All megacaps sank, with Amazon.com Inc. and Alphabet Inc. sinking over 4%. Lululemon Athletica Inc. tumbled 14% on a gloomy outlook.
Wall Street’s “fear gauge” - the VIX - topped 21. The dollar fell 0.1%. Bitcoin tumbled about 4%.
As President Donald Trump’s tariff policy expands, consumers are growing more worried that the added duties will drive up prices. A prolonged rise in costs could prompt households to cut back on discretionary spending, which has implications for broader economy — and Corporate America.
“Today’s data has the general pattern of what many observers will be looking for in the months ahead as new tariffs and other policy change begin to bite: weaker-than-expected spending and stronger-than-expected inflation,” according to David Alcaly at Lazard Asset Management.
While it’s premature to be drawing judgments, seeing this pattern in hard data could feed apprehension before next week’s announcements, Alcaly added.