Stocks opened lower Friday and losses accelerated as the session wore on. Sparking the sell-off was a concerning inflation update and another sharp slide in consumer sentiment.
At the close, the Dow Jones Industrial Average was off 1.7% at 41,583, the S&P 500 was 2.0% lower at 5,580, and the Nasdaq Composite was down 2.7% to 17,322. All three indexes closed lower on a weekly basis too.
Weighing on sentiment at the very start of the session was this morning's release of the Personal Consumption Expenditures Price Index (PCE) – the Federal Reserve's preferred measure of inflation.
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According to the Bureau of Economic Analysis, headline PCE rose 0.3% month over month in March and was up 2.5% year over year. Both figures were in line with what economists expected.
But core PCE, which excludes volatile food and energy prices, increased at a hotter-than-anticipated 0.4% monthly pace, while the annual 2.8% increase was also higher than estimates.
The PCE print "suggests that inflation still remains sticky, despite signs of softening in recent months," says Robert Ruggirello, chief investment officer at Brave Eagle Wealth Management.
He adds that today's report represents February data and "doesn't account for the expected uptick in inflation from tariffs," which creates "lots of uncertainty" to the outlook.
Still, Ruggirello believes the Federal Reserve is on track to cut interest rates two times this year, with the first coming in September. According to CME FedWatch, futures traders are pricing in a rate cut as soon as the June meeting.
Consumer sentiment keeps declining
Selling picked up mid-morning after the University of Michigan said its Consumer Sentiment Index fell to 57 in March from February's reading of 64.7. This was lower than the preliminary reading of 57.9 and confirmed a third straight monthly drop for the index.
"This month's decline reflects a clear consensus across all demographic and political affiliations … in expressing worsening expectations since February for their personal finances, business conditions, unemployment, and inflation," the report stated.
Both year-ahead (5.0%) and long-run (4.1%) inflation expectations came in higher than the preliminary readings.
Lululemon stock sinks on weak guidance
In single-stock news, Lululemon Athletica (LULU) became the latest company to warn of harder times ahead. While the athletic apparel retailer reported top- and bottom-line beats for Q4, its full-year outlook came up short of what Wall Street expected.
In the company's earnings call, CEO Calvin McDonald said the results of a recent survey it conducted indicate that "consumers are spending less due to increased concerns about inflation and the economy."
He added that this is "manifesting itself into slower traffic across the industry."
LULU ended the day down 14.2% – making it Friday's worst-performing S&P 500 stock – but Wall Street doesn't seem too worried.
Stifel analyst Jim Duffy was one of several analysts who reiterated a Buy rating on the consumer discretionary stock after earnings. Duffy says that he appreciates "the relative conservatism" in Lululemon's guidance, adding that the company has a "track record for outperformance" and several "tangible near-term drivers."
Equinix gets a big upgrade from CFRA
Elsewhere, Equinix (EQIX) tumbled 2.7% even after CFRA Research analyst Kenneth Leon upgraded the real estate investment trust (REIT) to Strong Buy from Hold.
Not only does EQIX's current share price mark "an attractive entry point," but Leon thinks it is one of the best REITs to buy to capitalize on the data center needs of artificial intelligence (AI) and cloud computing firms.
He has a $985 price target on Equinix, representing implied upside of more than 22%. Leon says this is a "premium to direct peers in the fast-growing data center market given EQIX market leadership."
CoreWeave stock price rises in market debut
CoreWeave (CRWV) was also in focus after the artificial intelligence (AI) infrastructure firm made its public trading debut.
The company priced its initial public offering (IPO) last night at $40 per share – below the previous range of $47 to $55 per share.
Shares opened at $39 and traded between $37.50 and $41.89 before ending the day squarely at $40.00.
All in all, it was not a great first day for what will likely be one of the biggest IPOs of the year, and retail investors may want to remain on the sidelines for now given how volatile the market.
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