Washington DC -Wall Street had a miserable Friday, with major indexes suffering their worst day in months as jitters over stubborn inflation and geopolitical tensions erupted. The rout swept through sectors, clobbering bank shares and undoing weeks of steady gains for the market.
The Dow Jones Industrial Average plummeted 475 points, shedding 1.24% to end at 37,983. The S&P 500 tumbled 1.46% to 5,123, while the tech-heavy Nasdaq fared worst, falling 1.62% to 16,175.
At its nadir, the Dow had plunged nearly 600 points before paring some losses into the close. But the damage was done - for the week, the S&P 500 dropped 1.56% and the Dow fell 2.37%.
The selloff gained momentum after a series of economic reports amplified fears that the Federal Reserve's battle against inflation is far from over. Consumer sentiment dipped in April as worries over high prices persisted, according to the University of Michigan survey. Inflation expectations also ticked higher.
Meanwhile, import prices posted their biggest monthly rise since last summer, renewing concerns that stubbornly high costs for foreign goods will keep inflationary pressures simmering.
"We're seeing risk-off sentiment heading into the weekend amid a flight to safety," said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. "The inflation data tells us the economy is still pretty hot and inflation sticky - that's leading investors to get cautious."
Bank shares led the market's retreat after JPMorgan Chase warned its key lending profits could disappoint this year due to higher rates. JPMorgan tumbled over 6% while Wells Fargo and Citigroup also slumped.
Geopolitical jitters added to the market's woes. Oil prices surged back above $85 a barrel on reports Israel is bracing for potential Iranian strikes this weekend in the biggest escalation of Mideast tensions since last fall's Israel-Hamas war.
"We could be in for a very volatile weekend on the geopolitical front," said Haworth. "That certainly isn't helping sentiment."
So after weeks of relative calm, Wall Street is being forced to grapple again with the twin spectres of persistent inflation and escalating geopolitical risks. Friday's rout shows investors remain on edge over the tough economic landscape.
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