U.S. stocks plunge as Trump tariff fears spread among businesses, consumers

The Dow Jones Industrial Average dropped 748 points and other indexes fell sharply as fears about tariffs impacting the U.S. economy spread.

U.S. stocks fell sharply Friday after reports showed that worries among consumers and businesses about President Donald Trump’s policies may be hitting the U.S. economy.

The S&P 500 sank 1.7% for its worst day in two months. The Dow Jones Industrial Average dropped 748 points, or 1.7%, and the Nasdaq composite tumbled 2.2%.

The losses accelerated through the day following several weaker-than-expected reports on the economy. One suggested U.S. business activity is close to stalling, with growth slowing to a 17-month low. The preliminary report from S&P Global said activity unexpectedly shrank for U.S. services businesses, and many in the survey reported slumping optimism because of worries about Washington.

“Companies report widespread concerns about the impact of federal government policies, ranging from spending cuts to tariffs and geopolitical developments,” said Chris Williamson, chief business economist at S&P Global Market Intelligence. “Sales are reportedly being hit by the uncertainty caused by the changing political landscape, and prices are rising amid tariff-related price hikes from suppliers.”

A separate report said U.S. consumers are also preparing for higher inflation, in part because of potential tariffs that could raise prices for all kinds of imports. They’re broadly expecting prices to be 4.3% higher 12 months from now, which is a big jump from their forecast of 3.3% inflation last month, according to a survey by the University of Michigan. That fits with preliminary data in the survey earlier this month.

Among U.S. households, though, a divide is evident underneath the surface. Expectations for inflation are rising for political independents and Democrats, while falling slightly for Republicans.

A third economic report, meanwhile, said sales of previously occupied homes were weaker last month than economists expected. Relatively high mortgage rates, along with expensive prices for homes, have been hurting sales.

To be sure, the U.S. stock market is still up for the young year so far and is not far from its all-time high set earlier this week.