Stocks experienced heavy selling on Friday due to renewed inflation fears, plummeting consumer confidence, and doubts about the payoff from artificial intelligence. The S&P 500 was down 2%, while the Nasdaq fell nearly 3%, putting both indices on track for their fifth weekly decline in six weeks. The Bureau of Economic Analysis reported higher-than-expected inflation in February, signaling resistance to the Federal Reserve’s efforts to raise interest rates. Consumer inflation expectations also surged due to concerns about President Trump’s tariffs strategy. Additionally, there were worries about higher unemployment and decreased financial outlook among consumers. These factors collided with concerns on Wall Street about the ROI from significant investments in AI, resulting in stock declines for companies like Nvidia. A Wall Street report suggested Microsoft had halted new data center projects, raising questions about continued spending on AI. However, Microsoft stated it was well-prepared to meet customer demand and grow in all regions. Furthermore, an AI-related IPO saw a decrease in price sought and shares sold. Despite the market uncertainty, some analysts believe the current economic challenges may just be a short-term setback as investors navigate new policies. While there has been recent market volatility, many investors are choosing to stay invested rather than move funds to money markets.
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