Dow, S&P 500, Nasdaq sink as consumers start to sour on US economy

The uncertainty surrounding tariffs and the possibility of a slowing economy caught up to investors Friday, as stocks fell sharply at the closing bell, renewing broader concerns of a market correction.

The S&P 500 (^GSPC) shed 1.7%, while the tech-heavy Nasdaq Composite (^IXIC) lost over 2%, reversing earlier gains. The Dow Jones Industrial Average (^DJI) fell about 750 points, or about 1.7%, after leading a broad Wall Street slide on Thursday.

Friday’s steep downturn pushed all three major indexes into the red for the week.

The sharp turn downward Friday sent the major indexes on a losing trajectory for the week, highlighting a more pessimistic shift in mood as fresh economic data suggested a slowdown in momentum and a souring consumer outlook.

The S&P 500 (^GSPC), down 1.5% in the final hour of trading, was headed for a weekly loss of 1.6%, while the tech-heavy Nasdaq Composite (^IXIC) shed more than 2% and was on track to give up 2% for the week. The Dow Jones Industrial Average (^DJI) slipped 1.6% or 700 points, positioning for a loss of 2.8% for the week.

A confluence of factors accompanied the selling Friday. Wall Street was confronted with flagging consumer sentiment in a fresh reading from the University of Michigan consumer sentiment index, and US business activity growth came close to stalling in February, according to flash PMI survey data published Friday.

American consumers had a dimming outlook on the economy in February as uncertainty over Trump’s trade policy moved inflation expectations sharply higher.

The latest University of Michigan consumer sentiment survey released Friday showed headline sentiment extended its early-month decline, sliding nearly 10% from January to a reading of 64.7. Pessimism over the inflation outlook drove February’s final read lower as one-year inflation expectations jumped to 4.3% from 3.3% last month, Yahoo Finance’s Allie Canal reports.

The reading marked two consecutive months of “unusually large” increases, according to the release.

“What we’re seeing is a very broad-based conclusion or opinion among consumers that inflation is going to pick up in the year ahead, as well as the next five years,” Joanne Hsu, director of consumer surveys at the University of Michigan, told Yahoo Finance on Friday.

Read more about souring consumer sentiment here.

An important gauge of economic output is flashing warning signs about growth.

New data released earlier on Friday showed that economic output tumbled in February to its lowest overall reading in 17 months. A drop in services sector activity drove the decline. S&P Global Services PMI fell to 49.7 in February, from 52.9 in January, a 25-month low.

All three major indexes were trading in the red Friday afternoon.

“The upbeat mood seen among US businesses at the start of the year has evaporated, replaced with a darkening picture of heightened uncertainty, stalling business activity and rising prices,” S&P Global Market Intelligence chief economist Chris Williamson said in the release. “Companies report widespread concerns about the impact of federal government policies, ranging from spending cuts to tariffs and geopolitical developments.”

Williamson added that optimism about the year-ahead has swung to “one of the gloomiest since the pandemic.” While January’s PMI data had indicated the US economy would likely grow at 2% annual rate in 2025, February’s data suggest just 0.6% growth.

Investors have come to expect a new regulatory environment for the crypto industry as shares of the digital currency exchange Coinbase (COIN) fell Friday, even after the platform said the Securities and Exchange Commission intended to drop its lawsuit against the company.

“SEC staff have agreed to dismiss their case against us (pending Commission approval),” the company said in a post on X.

The lawsuit, initiated in the Biden era, sought to treat the company as a stock exchange and was among a wave of enforcement actions targeting the regulatory gray areas surrounding cryptocurrency trading.

Coinbase had argued that crypto assets should not be treated the same as securities.

Since the election of Donald Trump, the crypto industry has rejoiced over the president’s embrace of digital assets and his appointment of officials who have taken a pro-innovation stance toward cryptocurrencies, dismissing attempts to regulate the novel assets

Here are some of the stocks leading Yahoo Finance’s trending tickers page during afternoon trading on Friday:

UnitedHealth Group’s (UNH): Reports that the Department of Justice is investigating UnitedHealth Group’s (UNH) Medicare billing practices have continued to hammer the stock, sending shares lower by nearly 9% on Friday. The civil fraud investigation, first reported by the Wall Street Journal, examines how UnitedHealth records diagnoses that boost payments from the Centers for Medicare and Medicaid Services (CMS).

Celsius (CELH): Shares of the energy drink maker surged Friday after announcing a $1.8 billion deal to acquire rival Alani Nutrition in a transaction expected to close in 2025’s second quarter. Celsius stock soared by more than 30% as the plans became public. The deal is Celsius’s largest acquisition and highlights the power of social media branding and influencer partnerships, both key to Alani Nu’s success.

Block (XYZ): The financial services company is still reeling from an earnings miss after the bell on Thursday. Stocks continued to slide in the afternoon session Friday, falling 16%. For the fourth quarter, the parent company of Cash App and Square fell short of expectations for net revenue ($6.03 billion vs. $6.28 billion expected) and adjusted earnings ($0.71 vs. $0.89 expected).

Novo Nordisk (NVO): Shares of the pharmaceutical company rose nearly 6% Friday after the Food and Drug Administration said that shortages of their popular weight-loss drugs Wegovy and Ozempic had been resolved. Relatedly, the telehealth company Hims & Hers (HIMS), which has been selling a copycat weight-loss drug during the shortage, nosedived Friday, losing 22%.

All three major indexes fell into the red Friday, with the Dow Jones Industrial Average (^DJI) falling more than 400 points.

UnitedHealth (UNH) shares dragged the Dow lower Friday afternoon. The healthcare company tumbled 8% in afternoon trading after a report said the Department of Justice is probing its Medicare billing practices.

Consumer sentiment also took a hit this month as Americans anticipate tariff-induced price hikes. The University of Michigan’s consumer sentiment index tumbled to 64.7 at the end of February, below January’s 71.7, according to data published Friday. Consumers also expressed a worsened outlook for inflation in the year ahead.

The S&P 500 (^GSPC) shed 0.5% while the tech-heavy Nasdaq Composite (^IXIC) lost 0.7%, reversing earlier gains.

The benchmark S&P 500 and Nasdaq are on track for weekly wins, while the Dow is staring at a loss.

Energy drink brand Celsius Holdings (CELH) plans to acquire rival Alani Nutrition in a $1.8 billion deal expected to close in 2025’s second quarter.

Celsius stock soared by more than 30% Friday as the plans became public.

The deal is Celsius’s largest acquisition and comes as energy drink sales are rising. The rapid growth of Alani Nu, founded in 2018 by fitness influencer Katy Hearn, also highlights the power of social media branding and influencer partnerships. Positioned as a fitness aid, Alani Nu would add to Celsius’ existing product line.

“The transaction will combine two growing, scaled brands in the U.S. energy drink category, creating a leading better-for-you, functional lifestyle platform that is well positioned to capitalize on the growing consumer preference for zero-sugar alternatives,” Celsius said in a statement.

Other legacy brands are getting in on the energy drink play, including Keurig Dr Pepper (KDP).

Reports that the Department of Justice is investigating UnitedHealth Group’s (UNH) Medicare billing practices have continued to hammer the stock, sending shares nearly 9% lower on Friday.

The civil fraud investigation, first reported by the Wall Street Journal, examines how UnitedHealth records diagnoses that boost payments from the Centers for Medicare and Medicaid Services (CMS). CMS pays private insurers lump sums to provide alternate Medicare coverage.

It’s the sixth time this year the stock has traded down and the second time this week, Yahoo Finance’s Anjalee Khemlani reports. Earlier this week, the company reportedly offered buyouts to employees of its health insurance business, UnitedHealthcare, and considered layoffs if it didn’t reach the target for buyouts.

The DOJ has also been scrutinizing the company for a potential breakup, and the Federal Trade Commission (FTC) could block its latest acquisition.

Read more about UnitedHealth’s troubles here.

Sales to purchase an existing home started the year lower as higher mortgage rates dampened housing activity.

Existing home sales declined 4.9% in January to a seasonally adjusted annual rate of 4.08 million, according to the National Association of Realtors. Economists polled by Bloomberg expected existing home sales to hit a pace of 4.13 million in January.

“Mortgage rates have refused to budge for several months despite multiple rounds of short-term interest rate cuts by the Federal Reserve,” NAR chief economist Lawrence Yun said in a statement. “When combined with elevated home prices, housing affordability remains a major challenge.”

House hunters have been on the fence about buying a home due to expensive housing costs. Mortgage rates have drifted lower over the past few weeks but remain around 7%, challenging many potential buyers.

The median home sale price rose 4.8% from a year ago to $396,900, and January marked the 19th consecutive month of year-over-year price increases.

UnitedHealth (UNH) shares dragged down the Dow to start the trading day Friday, following a report that said the Department of Justice is probing the company’s Medicare billing practices. Shares of the healthcare company fell about 10% during morning trading, pulling down the Dow Jones Industrial Average (^DJI), which fell 0.5%.

The major indexes weren’t all in the red, however. The S&P 500 (^GSPC) edged just below the flatline, while the tech-heavy Nasdaq Composite (^IXIC) rose 0.2%.

The benchmark S&P 500 and Nasdaq are on track for weekly wins, while the Dow is staring at a loss.

Celsius Holdings (CELH) is acquiring Alani Nutrition for $1.8 billion in cash and stock. The deal expands its sports and energy drink portfolio. Investors reacted positively, sending shares up 32% in premarket trading on Friday.

Reuters reports:

Read more here.