1. Consumer sentiment dropped to 64.7, lowest since November 2023. Economic uncertainty looms. 2. Inflation expectations rose sharply to 4.3% over the next year. This surprised economists. 3. Tariff plans by President Trump add market uncertainty. Policy risks are clear. 4. The CPI hit 3% annually, reinforcing inflation concerns. This challenges the Fed's targets.
The decline in sentiment and rising inflation expectations have historically triggered market pullbacks. Elements like tariff uncertainty previously spurred volatility seen during periods such as the early 2000s and post-2008 downturns.
Key economic indicators and new tariff policies increase uncertainty and risk for the S&P 500. Historical correlations between consumer sentiment, inflation, and market performance support a significant near-term impact.
Markets tend to react rapidly to shifts in consumer sentiment and policy uncertainty. Similar short-term volatility occurred following unexpected economic data releases in past cycles.