US stocks experienced a sharp sell-off on Friday, with major indices posting their worst performance of the year amid mounting concerns over economic growth and stubborn inflation. The Dow Jones Industrial Average tumbled nearly 750 points, dragging its two-day losses to around 1,200 points, while the S&P 500 and Nasdaq Composite also fell sharply. A string of weak economic data, including a steep drop in consumer sentiment and disappointing housing market figures, fuelled investor anxiety, prompting a flight to safer assets. Meanwhile, fears over potential new tariffs from the Trump administration further weighed on sentiment, adding to the uncertainty as traders braced for more policy shifts over the weekend.

Key Takeaways:

  • Dow Posts Worst Day of 2025, Drops Nearly 750 Points: The Dow Jones Industrial Average plummeted 748.63 points, or 1.69%, to close at 43,428.02, marking its worst single-day decline of the year. The sharp sell-off extended its two-day losses to nearly 1,200 points, as traders reacted to disappointing economic data and growing concerns over potential tariffs from the Trump administration.
  • S&P 500 Slides After Record High: The S&P 500 tumbled 1.71%, closing at 6,013.13, following a record-breaking session on Wednesday. The broad-based index registered its second consecutive day of losses, reflecting heightened investor caution amid weakening economic indicators. For the week, the S&P 500 lost approximately 1.7% as investors rotated into defensive sectors.
  • Nasdaq Sinks as Tech Stocks Face Heavy Selling: The Nasdaq Composite suffered the steepest decline among major US indices, plunging 2.2% to settle at 19,524.01. High-growth tech stocks took on majority of the downturn, with investor favourites like Nvidia and Palantir seeing significant losses. 
  • European Markets End Mixed After Choppy Week: The Stoxx 600 index closed 0.52% higher on Friday, recovering after two consecutive days of losses driven by earnings disappointments. France’s CAC 40 gained 0.4%, marking its second straight session of gains, while Italy’s FTSE MIB advanced 0.5% to 38,421. However, the FTSE 100 underperformed, slipping 0.84% with a loss of 73.09 points. Meanwhile, UK retail sales rose 1.7% month-over-month in January, far exceeding expectations of 0.4%, while core retail sales climbed 2.1% month-over-month, well above the 0.9% forecast. Germany’s DAX ended the day down 0.12%, with investors eyeing political uncertainty ahead of the country’s election weekend.
  • Asian Markets Rally as Hong Kong Hits Three-Year High, Japan Inflation Rises: The Hang Seng Index in Hong Kong soared 3.76%, reaching its highest level since February 2022, as investor optimism around China’s economic policies lifted sentiment. The Hang Seng Tech Index jumped 6.15%, with Alibaba leading the rally, surging 14.7% after reporting strong quarterly earnings. In mainland China, the CSI 300 climbed 1.26% to close at 3,978.44. Meanwhile, Japan’s core inflation rate rose to 3.2% in January, exceeding expectations of 3.1% and marking its highest level since January 2023. The Nikkei 225 inched up 0.26% to 38,776.94, while the Topix ended flat at 2,736.53. South Korea’s Kospi ended the day unchanged at 2,654.58, and Australia’s S&P/ASX 200 slipped 0.32% to 8,296.2.
  • Consumer Sentiment Plummets as Housing Market Weakens: The University of Michigan consumer sentiment index dropped sharply to 64.7 in February, a steep 9.8% decline from January and its lowest reading in nearly a year. Consumers expressed growing concerns about rising inflation and the economic impact of potential new tariffs. The 5-year inflation outlook in the survey surged to 3.5%, its highest level since 1995. Adding to concerns, existing home sales declined more than expected last month to an annualised pace of 4.08 million units.
  • Weak Economic Data Hits Both US and European Business Activity: The S&P Global US Services PMI unexpectedly fell into contraction territory, declining to 49.7, its lowest level in over two years. Meanwhile, the Manufacturing PMI came in at 51.6, missing expectations of 52.8. In Europe, the Eurozone Manufacturing PMI was reported at 47.3, slightly better than expectations of 46.9, but the Services PMI disappointed at 50.7, missing estimates of 51.5. Germany’s composite PMI improved to 51.0, a nine-month high, but France’s composite PMI fell sharply to 44.5, well below forecasts of 48.0.
  • US Treasury Yields Drop as Investors Flee to Safety: The 10-year Treasury yield tumbled 7 basis points to 4.427%, while the 2-year yield declined 6 basis points to 4.202% as investors rushed into bonds amid the equity market sell-off. Traders reacted to deteriorating economic data, increasing expectations that the Federal Reserve could deliver as many as three rate cuts by December 2025.
  • Oil Prices Sink as Middle East Risk Premium Fades: Brent crude settled down $2.05 or 2.68%, at $74.43 per barrel, while West Texas Intermediate (WTI) crude dropped $2.08, or 2.87%, to $70.40 per barrel. Oil markets faced pressure as geopolitical risk premiums eased and investors weighed the impact of a potential peace deal in Ukraine. US crude futures posted a 0.5% weekly loss, while Brent crude finished the week down 0.4%.

FX Today:

  • EUR/USD Weakens on US Dollar’s Recovery: The EUR/USD pair slid on Friday to 1.0460, dropping 0.38% as the pair failed to hold above the key psychological level of 1.0500. The Euro struggled after the release of the Eurozone HCOB PMI, which showed a slower-than-expected expansion in business activity. The 50-day SMA at 1.0389 remains a key support level, with any break below this potentially pushing the pair toward 1.0300. On the upside, resistance is seen at 1.0553, and a move above this level could open the door for further gains toward the 100-day SMA at 1.0600.
  • GBP/USD Slips After Facing Resistance at 100-Day SMA: GBP/USD ended the week at 1.2633, falling 0.29% as the British pound struggled to hold above the 1.2670 resistance level. The pair had climbed to a high of 1.2678 on Thursday, supported by stronger-than-expected UK retail sales data, which showed a 1.7% month-over-month increase, far exceeding forecasts of 0.4%. However, the pound failed to maintain its gains after encountering strong resistance at the 100-day SMA at 1.2661, triggering a wave of selling pressure. Despite the pullback, GBP/USD remains above its 50-day SMA at 1.2463, suggesting that the broader trend remains intact. Immediate resistance is seen at 1.2670, with the next key upside target at 1.2789, marking the 200-day SMA. On the downside, support lies at 1.2550, followed by 1.2500 if downward pressure intensifies. If selling accelerates, a further decline toward the 1.2463 level could be possible.
  • AUD/USD Faces Pressure After Weak Aussie Demand: AUD/USD fell 0.67% on Friday, closing at 0.6357, as the pair came under renewed pressure following disappointing US economic data. Earlier in the week, AUD/USD gained momentum, breaking above the 50-day SMA at 0.6262 and briefly testing the 100-day SMA at 0.6420, but bullish momentum quickly faded as sellers regained control. The pair now faces strong resistance at the 0.6400 level. Immediate support lies at 0.6260, with a break below this level potentially triggering a deeper correction toward 0.6200. If sentiment shifts, a push beyond 0.6420 would open the door for a retest of the 200-day SMA at 0.6652.
  • Gold Rally Stalls but Remains on Track for Eight Straight Weekly Gains: Gold prices ended Friday at 2,934, down 0.15% after failing to sustain an earlier breakout above 2,950. The metal had risen to an intraday high of 2,949, supported by safe-haven demand, before encountering resistance and retreating slightly. The 50-day SMA at 2,742 provides a key support level, with additional buying interest likely around 2,920. If gold breaks above 2,950, it could trigger further upside momentum, with the next major target at the psychological 3,000 level. However, a break below 2,900 could increase selling pressure, potentially leading to a deeper correction toward the 2,870 level. 

Market Movers:

  • Akamai Technologies Plunges on Disappointing Revenue Forecast: Shares of Akamai Technologies dropped 21%, leading losses in the S&P 500 after the company issued a weaker-than-expected revenue outlook. 
  • UnitedHealth Group Falls as DOJ Launches Medicare Billing Investigation: UnitedHealth Group slumped 7%, making it the worst performer in the Dow, after reports surfaced that the US DoJ has launched an investigation into the company’s Medicare billing practices.
  • Block Sinks After Weak First-Quarter Profit Guidance: Shares of Block nosedived 17% after the payment services company forecasted first-quarter gross profit of $2.32 billion, missing analyst expectations of $2.38 billion. 
  • CrowdStrike Drops Following Reports of DOJ and SEC Investigation: Shares of CrowdStrike fell 6% after Bloomberg News reported that the US Department of Justice and the Securities and Exchange Commission are investigating a $32 million deal between CrowdStrike and a technology distributor for cybersecurity services to the Internal Revenue Service. 

As the trading week came to a close, markets ended on a volatile note, with the Dow Jones suffering its worst day of 2025, while the S&P 500 and Nasdaq also posted steep losses. Investors reacted to a sharp drop in consumer sentiment, weaker-than-expected existing home sales, and disappointing PMI data from both the US and Europe, which further fuelled fears of an economic slowdown. Meanwhile, Treasury yields dropped as traders increased bets on multiple Fed rate cuts by the end of 2025, and oil prices slipped more than 2% amid fading geopolitical risks and concerns over demand.