US Stocks declined in a holiday-shortened week despite record highs midweek. Investor concerns grew over President Trump’s proposed tariffs on cars, pharmaceuticals, and lumber, along with weak economic data. Walmart’s earnings report on Thursday worsened sentiment. While the company beat expectations, its weak outlook raised fears about consumer spending, following a sharp drop in January retail sales. The housing market also showed weakness, with builder confidence hitting a five-month low and housing-starts falling nearly 10% m/m. Business activity slowed, with the services sector contracting for the first time in two years. Consumer sentiment dropped nearly 10% in February, with inflation expectations rising. US Treasuries rallied as weak data reinforced expectations that the Federal Reserve will keep interest rates steady.
European stocks were mixed as investors assessed US trade policy and geopolitical tensions. The STOXX Europe 600 rose 0.26%, while Germany’s DAX fell 1.00% ahead of elections. France’s CAC 40 dipped 0.29%, Italy’s FTSE MIB gained 1.17%, and the UK’s FTSE 100 lost 0.84%. Eurozone business activity barely grew in February, with the Composite PMI at 50.2. Weak new orders and rising costs kept growth sluggish. In the UK, PMI declined, and private sector job losses hit their highest since 2020. UK inflation rose to 3% in January, led by higher transport and food costs, while wages grew 5.9% annually. The jobless rate held steady at 4.4%. Retail sales jumped 1.7% and non-food sales remained weak. Consumer confidence improved slightly but stayed negative.
