Wall Street Closes Lower as Trade Tariff Concerns and Inflation Weigh on Markets

The New York Stock Exchange (NYSE) closed in the red on Friday (February 7, 2025), local time (Saturday morning WIB). Market sentiment turned negative as trade tariff concerns and inflation worries rattled investors on Wall Street.

Major Wall Street indices suffered sharp declines after U.S. President Donald Trump announced plans to implement reciprocal tariffs on trade partners. This policy could increase overall import tariffs to match those imposed on the United States.

The Dow Jones Industrial Average fell 444.23 points, or 0.99 percent, to 44,303.40. The S&P 500 dropped 0.95 percent to 6,025.99, while the Nasdaq Composite slid 1.36 percent to 19,523.40. Friday’s downturn resulted in weekly losses for all three major indexes.

"I will announce a reciprocal tariff policy next week so that we are treated fairly by other nations," Trump stated during a meeting with Japanese Prime Minister Shigeru Ishiba.
"We will hold a press conference and explain it in simple terms," he added.

Rising Inflation and Economic Data Shake Markets

Even before Trump’s remarks, the stock market was already in a fragile state as economic data pointed to rising inflationary pressures. U.S. 10-year Treasury yields surged past 4.5 percent at the peak of the trading session.

Meanwhile, the University of Michigan consumer sentiment index for February dropped to 67.8, below economists' expectations of 71.3, according to a Dow Jones survey.

More concerning was the one-year inflation expectation, which rose to 4.3 percent, up one percentage point from the previous month, marking the highest level since November 2023.

Additionally, January 2025 labor market data showed the unemployment rate fell to 4 percent from 4.1 percent, while average hourly wage growth exceeded forecasts.

Amazon and Alphabet Stocks Slump as Tech Sector Struggles

In corporate news, Amazon’s stock tumbled 4 percent after the e-commerce giant issued a weak first-quarter revenue growth forecast, projecting only 5 to 9 percent—the slowest growth rate in the company’s history.

This overshadowed strong fourth-quarter earnings that had exceeded analyst expectations. Meanwhile, Alphabet shares continued to decline following a disappointing earnings report earlier in the week.

"We’re seeing rare disappointment in the tech sector, particularly among the 'Magnificent Seven', which usually outperforms expectations," said Sam Stovall, Chief Investment Strategist at CFRA Research.
"I don’t see this as the start of a bear market, but rather a period of short-term volatility and investor disappointment," he added.

Market Volatility Persists as Trump’s Tariff Plans Spark Sell-off

This week has been a turbulent one for U.S. stock markets. Stocks initially dropped on Monday after Trump imposed a 10 percent tariff on China over the weekend. He also proposed a 25 percent tariff on Canada and Mexico, though he later rescinded the plan.

The S&P 500 enjoyed a three-day rally after the tariff suspension, but markets fell again on Friday, as concerns over trade policy and inflationary pressures weighed on investor sentiment.

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