Inflation and Tariff Jitters Shake Market Confidence

US stocks tumbled after Walmart, the world’s biggest retailer, warned that 2025 could be a rough ride. The company expects sales growth to slow as consumers pull back, raising concerns that spending—the backbone of the US economy—may be running out of steam.

The Dow shed 451 points by the closing bell after dipping more than 650 points intraday, a 1.5% drop. The S&P 500 slipped 0.43%, while the Nasdaq Composite lost 0.47%. Walmart stock plunged 6.5%, wiping billions off its market cap, as investors digested the company’s cautious outlook.

Inflation remains a heavy burden, compounded by years of high interest rates. The Federal Reserve’s benchmark rate, still hovering around 5.25%-5.50%, has tightened credit conditions, pressuring both businesses and consumers. 

A fresh threat now looms—trade policy. President Donald Trump has already imposed a 10% tariff on all Chinese imports and slapped a 25% tariff on steel and aluminum. More duties on Mexico and Canada are set to take effect in March, with the administration studying broader “reciprocal tariffs” that could escalate global trade tensions.

What Does This Mean for Me?

Retailers are feeling the squeeze. The Commerce Department reported a sharp 0.9% drop in retail sales last month, far worse than the 0.4% decline economists expected. That pullback, coupled with weakening consumer sentiment, suggests the spending slowdown is accelerating.

Analysts expect inflation to jump to its highest level since late 2023 while consumer confidence plunges. If shoppers keep tightening their belts, 2025 could be a tough year for the broader market.