U.S. Stocks Plunge Across the Board

The U.S. stock market experienced a significant decline on Friday, February 21, as traders reacted to a wave of economic data that sparked concerns about the health of the American economyAll three major stock indices—the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite—saw substantial drops, with the Nasdaq falling by more than 2% by the closing bell.

By the end of trading, the Dow slid 1.69% to settle at 43,428.02 points, while the S&P 500 dropped 1.71% to finish at 6,013.13 pointsThe Nasdaq Composite took the hardest hit, with a 2.20% decrease, culminating at 19,524.01 pointsReviewing the week as a whole, the Dow found itself down 2.51%, marking its largest weekly loss since late October, while the S&P ended down 1.66%, reflecting its biggest drop since mid-JanuarySimilarly, the Nasdaq's 2.51% week-over-week decline represented its most considerable fall since November of the previous year.

Market analysts attribute this downturn to a series of troubling economic indicators that heightened fears surrounding the U.S. economyIn response to the declining sentiment, investors flocked to bonds, which drove down treasury yields markedlyFor instance, both the 2-year and 10-year U.STreasury yields fell by more than seven basis points during the trading day, a sign of shifting investor psychology.

One particularly alarming release came from the University of Michigan's survey, which downgraded its February consumer sentiment index from an initial reading of 67.8 to a disheartening 64.7. This decline starkly illustrates growing apprehensions among consumers about the state of the current economic landscapeMore concerning is the survey's revelation that consumers' expectations for long-term inflation over the next 5 to 10 years have been revised upward to 3.5%, the highest level recorded since April 1995. Such data supports ongoing fears in the marketplace about rampant price increases in the near future.

This sense of trepidation resonated with the prior day's earnings report from retail giant Walmart, which is often seen as a bellwether for consumer spending trends

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Walmart projected a 4% increase in revenue and a 5.5% rise in profits for the fiscal year 2025. However, both figures represented a slowdown from their historical growth rates and fell short of earlier Wall Street expectationsThis not only highlights the specific challenges Walmart faces but also acts as a broader reflection of the complexities and uncertainties in the current economic environment.

Walmart executives expressed a candid outlook, acknowledging that increasing consumer frustration with inflation and anxieties regarding U.S. tariff policies could render the upcoming fiscal year more challenging for retailers like themselves.

Within the market itself, prominent hedge fund founder Steve Cohen from Point 72 weighed in, noting that factors such as trade policies and immigration regulations could lead to a noticeable slowdown in economic growth during the latter half of the year, posing a threat to continued bullishness in the stock market.

In times of concern regarding economic health, investors typically gravitate toward defensive sectorsAccording to Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report, the top-performing stocks in the S&P today all belonged to consumers' staples, utilities, and healthcare sectors, signifying a typical flight to safety during uncertain periods.

Taking a closer look at technology stocks—market leaders notorious for their volatility—showed a pervasive downturnFrom a capitalization perspective, heavyweight firms like Apple fell 0.11%, Nvidia plummeted 4.05%, Microsoft dipped 1.9%, Amazon dropped 2.83%, Alphabet's Class C shares decreased 2.71%, Meta fell 1.62%, Tesla experienced a significant 4.68% decline, and Broadcom was down 3.56%. Meanwhile, the Philadelphia Semiconductor Index tumbled 3.28%, with all 30 component stocks closing lowerNotable falls included Micron Technology down 5.02%, Qualcomm and GlobalFoundries both down 4.76%, and Intel down 4.68%.

Amid these market movements, significant company news was also reported