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Market Declines as Economic Data Spurs Concerns
The stock market experienced a downward trend throughout Friday, impacted by lackluster economic indicators. Negative reactions to earnings announcements also added to the downward pressure, resulting in significant losses across all three major indices as the week closed.
The morning brought a series of economic updates, with S&P Global reporting that its Flash Manufacturing Purchasing Managers Index (PMI) edged up to 51.6 in February, a slight increase from 51.2 in January. Contrastingly, the Flash Services PMI saw a notable decline, falling to 49.7 in February from 52.9 the previous month, indicating the first contraction in the services sector in over two years.
According to S&P Global’s report, “New business inflows into the services sector came close to stagnation.” The report highlighted concerns among service providers about the political uncertainty regarding federal spending cuts and the potential economic impacts of upcoming Trump policies as key factors in the observed slowdown.
Housing Market Faces Challenges
In related news, the National Association of Realtors reported a 4.9% decline in existing home sales for January, adjusting to a seasonally normalized rate of 4.08 million. José Torres, a senior economist at Interactive Brokers, noted, “Existing home sales offered little hope for a real estate recovery as elevated financing charges and costly properties are hampering affordability for prospective buyers.”
Consumer Sentiment Takes a Hit
The University of Michigan’s Consumer Sentiment Index reflected a concerning trend for Wall Street, revealing a drop to 64.7 in February from 71.7 in January—this decline was steeper than the initially reported figures. The data underscored heightened inflation expectations, with a year-ahead inflation rate now at 4.3%, marking a notable rise from the previous month’s 3.2%.
Joanne Hsu, Director of Surveys of Consumers, pointed out that all five components of the index deteriorated this month. The worst drop was witnessed in consumer perceptions regarding durable goods purchases, which fell by 19%, largely due to fears of imminent price hikes spurred by tariff policies.
Block Inc. Faces Severe Stock Drop
In single-stock news, Block (XYZ) saw its shares tumble by 17.7%, marking their steepest decline since 2020. This significant downturn occurred after the company reported disappointing earnings that fell short of both revenue and profitability expectations for its fourth quarter, despite strong growth in CashApp revenue. Analysts noted that Block’s outlook was less than promising as well.
Nevertheless, Oppenheimer analyst Rayna Kumar maintained an Outperform (Buy) rating for Block, emphasizing that the company is likely to see accelerated growth in its gross payment volume through initiatives such as expanding U.S. sales teams and enhancing its international presence.
UnitedHealth Experiences Stock Decline Amid Investigation
The stock of UnitedHealth Group (UNH) fell by 7.2% following reports from The Wall Street Journal regarding a Justice Department investigation into the health insurer’s Medicare billing practices. Although the Justice Department has not officially confirmed the probe, UnitedHealth responded robustly, claiming that the journal’s assertions about potential fraud are unfounded.
With shares priced around $465, UnitedHealth significantly influences the Dow Jones Industrial Average, which dropped 1.7% to 43,428. The decline in UnitedHealth contributed to a broader sell-off, causing the S&P 500 to decrease by 1.7% to 6,013 and the Nasdaq Composite to fall by 2.2% to 19,524.
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