S&P 500 Extends Losses Amid White House Chaos Fueling Stagflation Scenario

Barry Adams
24 Feb, 2025
New York City

Stock market indexes in New York extended Friday's losses amid worries of economic slowdown and rising inflation, driven by the Trump administration's drive to cut costs and pass on savings to wealthy donors. 

World markets halted a multi-week rally after investors began to factor in the implications of higher tariffs on inflation and a sharp slowdown in private sector activities in February.

Businesses of all sizes are worried that the latest barrage of firing federal workers and imposing an import tax on all manufactured goods shipped from Europe and Asia will begin to negatively impact consumer demand. 

Constant policy flip-flops and lack of stability in the White House, compounded by weak presidential administration, have kept multinational businesses worried about the erosion of U.S. competitiveness in the long term. 

Also, the lack of immediate resolution on the Russia-Ukraine conflict also weighed on bond yields and commodity markets.

Market mood soured on Wall Street after the latest FOMC meeting minutes confirmed that policymakers are not ready to lower rates unless inflation is on a sustainable downward path.

The slowdown in U.S. private sector activities in February, driven by uncertainty related to federal government policies, also weighed on the market, extending weekly losses and halting a five-week market rally.

Earnings dominated local stock markets around the world, as several leading companies reported results this week.

In the week ahead, the U.S. statistical agency is set to confirm its second estimate of the fourth quarter GDP growth at 2.3%.

International goods trade balance, new home sales, and durable goods orders are also expected to confirm a sustained slowdown in economic activities.

On the earnings front, investors are awaiting results from Nvidia, Salesforce, Home Depot, Lowe’s, and TJX Companies.

U.S. Commodities, Currencies, Indexes, Yields

The S&P 500 index decreased 0.3% to 5,995.07, the Nasdaq Composite edged down 0.8% to 19,364.47, and the Russell 2000 index was down 0.1% to 2,194.01.

The yield on 2-year Treasury notes edged higher to 4.21%, 10-year Treasury notes decreased to 4.42%, and 30-year Treasury bonds declined to 4.67%.

WTI crude oil decreased $0.11 to $70.30 a barrel, and natural gas prices edged lower by $0.28 to $3.95 a thermal unit.

Gold increased by $4.37 to 2,938.05 an ounce, and silver edged down by $0.17 to $32.32.

The dollar index, which weighs the US currency against a basket of foreign currencies, increased 0.12 to 106.73 and traded at a two-year high.

 

U.S. Stock Movers

Apple Inc. decreased 0.5% to $243.31, and the popular smartphone maker said it plans to invest $500 billion in the U.S. in order to boost its artificial intelligence capabilities. 

Robinhood Markets jumped 1.5% to $52.32 after the online trading platform operator said that the SEC is going to drop its investigation into its crypto unit. 

Rivian Automotive Inc. eased 0.4% to $12.92 despite the electric vehicle manufacturer reporting revenue growth in the fourth quarter ending in December.

Revenue increased to $1.73 billion from $1.31 billion, net loss shrank to $744 million from a loss of $1.52 billion, and net loss per diluted share declined to 70 cents from a loss of $1.58 a year ago.

For fiscal 2025, the company estimated it would deliver between 46,000 and 51,000 vehicles, compared to 51,579 vehicles in 2024.

Capital expenditures are expected to be between $1.60 billion and $1.70 billion, compared to a negative $1.14 billion, and adjusted EBITDA is expected to be between $1.70 billion and $1.90 billion, compared to an EBITDA loss of $2.68 billion in 2024.