The US stock market took a hit on Friday, as economic worries and policy uncertainty weighed on investor sentiment. The S&P 500 index fell 1.7% after consumer and industrial cyclical stocks were squeezed lower, accompanied by a decline in Treasury yields. A new reading from the University of Michigan showed downbeat expectations for household finances in coming years, while Walmart’s cautious first-quarter guidance added to the uncertainty.
Despite this, the market has shown resilience, with buyers lifting the index to record highs just days ago. However, the recent decline highlights the risk of a “growth scare” – a phase susceptible to bouts of unease and downside tests. The S&P 500 has retreated back to levels first reached in early December, with cyclical stocks such as industrials, bank stocks, and small caps experiencing significant declines.
Experts say the market is not yet due for a downturn, but the recent volatility suggests a need for caution. The Federal Reserve’s monetary policy decisions will also play a crucial role in shaping the market’s trajectory. For now, the S&P 500 remains near record highs, with many investors still optimistic about its prospects in 2025. However, the coming weeks will be key in determining whether this optimism is justified.
Source: https://www.cnbc.com/2025/02/22/resilient-stock-market-finally-succumbs-to-pressure-from-economic-worries-and-trump-policy-flux.html