Stocks Enter Correction Zone, Tariff Fears Hammer Consumer Confidence, Inflation Worries Hit 32-Year Highs: This Week In Markets

Wall Street wrapped up its fourth consecutive week in the red, a losing streak not seen since May 2022, and the S&P 500 index officially entered correction territory after sliding 10% from its February highs.

Investor anxiety remains high, fueled by the looming impact of trade tariffs touted by President Donald Trump and deep, abrupt spending cuts spearheaded by the DOGE office under Elon Musk.

February's inflation data brought positive news, reinforcing expectations for Federal Reserve rate cuts this year. The Consumer Price Index rose 2.8% year-over-year, easing from 3% in January and coming in below economist forecasts of 2.9%. Similarly, wholesale inflation remained unchanged on a monthly basis, marking a stark slowdown from January's 0.6% surge.

Yet, even these cooled-than-expected inflation prints failed to reignite risk appetite, as markets remained firmly focused on policy developments from the White House.

On Thursday, President Donald Trump threatened to impose a 200% tariff on European wines and alcoholic beverages unless the European Union removes its 50% duty on American whiskey.

Earlier in the week, the White House also announced tariffs on Canadian steel and aluminum will double to 50%, with a warning that auto tariffs could surge if Canada does not roll back its retaliatory duties. Trump further reaffirmed his commitment to reciprocal tariffs on global trade partners, set to take effect on April 2.

Consumer sentiment is reflecting the economic turbulence of a regime shift.

On Friday, the University of Michigan's latest survey showed a sharp decline in consumer confidence, with future economic expectations sinking to their lowest since July 2022 and long-term inflation expectations soared to their highest level since 1993 — a troubling sign consumers are bracing for persistent price pressures.

Against this backdrop, gold is once again shining as a safe-haven asset, drawing investors seeking protection. The yellow metal — as tracked by the SPDR Gold Trust GLD — surged to fresh all-time highs of $3,000 per ounce, securing gains for 10 of the past 11 weeks.

At the end of the week, markets rebounded amid confirmation that a government shutdown would be averted and the absence of trade-related headlines from Trump.

The Federal Reserve is widely expected to hold interest rates steady next week, but fresh economic projections may start to outline a stagflation scenario, characterized by slowing growth and stubbornly high inflation.

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