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US indexes crated Friday, closing sharply lower after hotter-than-expected PCE inflation data.
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Investors have grown nervous about consumer prices seeing a resurgence this year.
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February core PCE rose 2.8% from a year ago.
A fresh inflation report tanked stocks on Friday, as investors fled the market after new data showed prices rose faster than expected last month.
Major US indexes opened lower and dropped steadily through the morning. The sell-off accelerated around midday, with the Dow Jones Industrial Average losing over 600 points and the Nasdaq Composite plunging more than 2%.
Here's where indexes stood at the 4:00 p.m. ET closing bell on Friday:
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S&P 500: 5,579.85, down 2%
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Dow Jones Industrial Average: 41,574.45, down 1.71% (725.25 points)
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Nasdaq Composite: 17,322.99, down 2.70%
A discouraging inflation update is driving the sell-off at the end of the week, with investors digesting sticky inflation while also navigating uncertainty around President Donald Trump's tariff plans.
February's core personal consumption expenditures index rose 2.8% from a year ago, slightly outpacing consensus projections of 2.7%. The core index, a measure favored by the Federal Reserve, rose 0.4% compared to estimates of 0.3%. That's the biggest monthly increase in a year.
The hotter-than-expected data is fanning investors' fears that price increases are accelerating again, right as President Donald Trump embarks on a trade war that is widely expected to stoke further inflation.
"Much remains uncertain and it's premature to be drawing judgments about impacts, but seeing this pattern in hard data and not just surveys could feed apprehension before next week's announcements," David Alcaly, the lead macroeconomic strategist at Lazard Asset Management, wrote after the report.
Meanwhile, consumer spending was lower than expected, rising by 0.4%, below the 0.5% forecast.
All told, the data could continue to stoke Wall Street's fears that sticky inflation and waning economic activity could result in a stagflation scenario. Forecasters have described that as a worst-case scenario for the economy, as high inflation could prevent the Fed from lowering rates to stimulate the economy.
The PCE index covers data before President Donald Trump's tariff policies kicked in, but many economists and analysts expect increased levies will eventually result in higher consumer costs.
"While the economy appears solid, business executives are adopting a cautious stance on new investments, largely due to the Trump Administration's aggressive and unpredictable tariff policy," said Matt Stephani, the president of Cavanal Hill Investment Management.