Stock market correction deepens as inflation, tariffs, and slowing AI investments weigh on investors.
Stock Market Faces Sharp Pullback
The S&P 500 has dropped 10% from its February highs, marking a significant market correction. The downturn follows two years of strong gains, with the index rising 24% in 2024, fueled by optimism around AI spending and Federal Reserve rate cuts.
Inflation and Tariffs Shake Investor Confidence
Despite expectations of easing inflation, February CPI data showed inflation rising to 2.8%, sparking fears of prolonged interest rate pressures. At the same time, President Trump’s new tariffs—including 25% levies on imports from China, Mexico, and Canada—have led businesses to reconsider expansion plans.
Larry Fink: CEOs Growing Fearful of Economic Slowdown
BlackRock CEO Larry Fink noted that corporate leaders are becoming more cautious due to economic uncertainty. “Every CEO I talk to, we’re starting to talk about a more fearful economy right now,” he said.
AI Investment Slowdown Adds to Market Woes
The AI-driven market rally is facing new concerns, with capital expenditures from cloud giants Amazon, Microsoft, and Google potentially peaking after last year’s $191 billion investment. Investors worry that the growth momentum from AI spending could fade.
Is More Downside Ahead?
Fink warned that further losses could be possible, stating that a 7% drop is a blip compared to long-term gains but adding, “Is it going to fall another 8%? That’s a possibility.”
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