Nasdaq 100: Tech Stocks Sink as Amazon, Apple Drop on Fed Uncertainty and Tariffs

Dow Drops 300 Points on Tariff and Inflation Concerns, Nasdaq Falls 1% as Amazon Slides

Stocks pulled back sharply on Friday as traders reacted to renewed tariff concerns and fresh inflation data that raised questions about Federal Reserve policy. The Dow Jones Industrial Average tumbled 307 points, or 0.7%, while the S&P 500 declined by the same percentage. The Nasdaq Composite was the worst performer, dropping 1%, dragged down by a slide in Amazon shares. Friday’s decline erased most of the week’s gains across major indexes.

How Did Tariff Worries Spark the Sell-Off?

Markets turned lower after reports surfaced that President Donald Trump was considering imposing reciprocal tariffs on U.S. trading partners. According to sources cited by Reuters, this could involve raising tariffs to match those imposed on U.S. goods by other countries. The uncertainty surrounding trade policy rattled investor sentiment, particularly after a volatile week driven by shifting tariff announcements.

Before the tariff news, traders were already digesting inflation signals from fresh economic reports. The University of Michigan’s consumer sentiment index fell to 67.8 in February, missing expectations of 71.3. More troubling, consumers projected a one-year inflation rate of 4.3%, the highest level since November 2023. Additionally, January’s jobs report showed a drop in the unemployment rate to 4% from 4.1%, while average hourly earnings increased more than expected. The data pushed the 10-year Treasury yield above 5%, stoking fears that the Federal Reserve might keep rates elevated longer than anticipated.

Which Stocks Led the Decline?

Amazon was a major drag on the Nasdaq, falling 3.7% after issuing disappointing forward guidance. The e-commerce giant forecasted revenue growth of just 5% to 9% for the first quarter, its weakest projected growth on record. The report overshadowed an otherwise solid earnings beat.

Other tech heavyweights also struggled, with Apple sliding 1.9% and Microsoft losing 1.3%. The decline extended to consumer discretionary names, as Nike dropped 2.6% and Home Depot shed 1.5%. In the Dow, Boeing, Caterpillar, and Goldman Sachs all posted losses of nearly 1%.

A few defensive names managed to stay in the green. Chevron gained 1.1%, benefiting from strength in the energy sector, while Coca-Cola and Johnson & Johnson also eked out modest gains.

Which Sectors Felt the Most Pressure?

Ten of the 11 S&P 500 sectors traded lower, led by consumer discretionary and communication services, down 1.9% and 1.1%, respectively. Information technology, materials, and real estate also struggled. Energy was the lone gainer, rising 0.3% as oil prices stabilized.

Despite Friday’s slide, six of the 11 sectors remained positive for the week. Consumer staples led the advance, up 1.7%, followed by energy and technology, both gaining over 1%. On the downside, consumer discretionary stocks were the worst performers, down 3% for the week, while communication services dropped 2%.

What’s Next for the Market?

Traders will be closely monitoring upcoming inflation data and Federal Reserve commentary for clues on monetary policy. The recent rise in Treasury yields suggests persistent inflation concerns, which could weigh on equity valuations if rate-cut expectations are pushed further out. Additionally, geopolitical risks tied to trade policy may add further volatility in the weeks ahead.

Next week’s economic calendar includes the latest Consumer Price Index (CPI) and Producer Price Index (PPI) reports, both of which will be critical in shaping market expectations for the Fed’s next move. Investors will also be watching for any updates on corporate earnings guidance as companies navigate a more uncertain macroeconomic backdrop.

More Information in our Consumer Price Index (CPI).