US Stocks Plummet in Worst Trading Day of 2025
US stocks experienced a significant sell-off on Friday, marking the worst trading day of 2025. The downturn came just two days after the S&P 500 reached a record high, with the Dow Jones Industrial Average falling by over 700 points, contributing to a two-day loss of 1,200 points.
The sharp decline was fueled by a series of economic data releases that heightened concerns about inflation and the potential for higher interest rates. The Federal Reserve’s stance on maintaining current interest rates until inflation decreases added to investor anxiety.
Economic indicators across various sectors painted a gloomy picture. The University of Michigan’s consumer sentiment survey dropped to 64.7 in February, the lowest since November 2023, marking the second consecutive month of decline. Concerns about tariffs and inflation expectations were key factors in this downturn.
The housing market also showed signs of weakness, with existing home sales in January falling to 4.08 million, missing analyst predictions of 4.29 million. Jose Torres, a senior economist at Interactive Brokers, noted the lack of optimism for a real estate recovery, citing high financing costs and expensive properties as factors reducing affordability for potential buyers.
Perhaps most concerning was the unexpected contraction in the US services sector. The S&P flash U.S. services Purchasing Managers Index (PMI) dropped to 49.7 in February, below the expected 52.9 and December’s 52.8. This marks the first contraction in over two years and is particularly significant given the sector’s large role in the US economy.
As the closing bell rang at 4 p.m. on Friday, the major US indexes showed substantial declines. The S&P 500 closed at 6,013.13, down 1.7%. The Dow Jones Industrial Average ended at 43,428.02, also down 1.7% (749 points), while the Nasdaq Composite finished at 19,524.01, down 2.2%.
This market turbulence serves as a stark reminder of the delicate balance between economic growth and inflationary pressures, leaving investors and analysts closely watching for further developments in the coming weeks.
