Markets Take a Big Hit as Inflation Fears Grow, Palantir drops, Gold hits new record high
It was a rough end of week for the stock market, with all major indexes seeing big losses. The Dow dropped 764 points, marking its worst day of 2025, while the S&P 500 and Nasdaq also saw steep declines. Investors seem to be reacting to growing concerns about inflation, especially after new data showed the economy might be slowing down.
What’s Spooking the Markets?
- Economic Growth Stalling – The Services PMI, which measures business activity in the service sector, fell unexpectedly to 49.7. A reading below 50 suggests that this key part of the economy is shrinking.
- Inflation Concerns Rising – Consumer expectations for inflation jumped to 4.3%, the highest level since late 2023. Many are worried that new tariffs could push prices even higher.
- Investors Seeking Safety – As a result, investors are moving away from risky growth stocks and into safer assets like consumer staples—companies that sell essential products like food and household goods.
- The Fed Holds Back on Rate Cuts – The Federal Reserve had been expected to lower interest rates this year, but officials now seem hesitant. Meeting minutes show they’re concerned that new trade policies could push inflation even higher. Right now, markets are pricing in just two rate cuts for 2025.
Palantir’s Stock Plunges
Palantir (PLTR), the popular defense and AI software company, had a particularly bad week, falling over 18%. Here’s why:
- CEO Cashing Out – CEO Alex Karp disclosed plans to sell up to $1.23 billion worth of his shares. Big insider sales like this often make investors nervous because they might signal a lack of confidence in the stock’s future.
- Potential Pentagon Budget Cuts – The U.S. government is considering cutting defense spending by 8% per year for the next five years. While some think this could hurt defense contractors, others believe it could actually help Palantir, as the military may look for cost-saving tech solutions.
Gold’s Rollercoaster Ride
Gold prices dipped late on Friday but are still on track for their eighth straight week of gains. The precious metal hit a record high of $2,954, and many believe it could break above $3,000 soon. Why is gold rising?
- Inflation Hedge – With inflation fears growing, investors are turning to gold, which is often seen as a safe haven.
- Fed Policy – While the Fed isn’t raising rates, they’re also not cutting them just yet. This uncertainty is keeping gold in high demand.
Final Thoughts
The market is facing a tough period, with inflation worries and economic slowdown fears shaking investors. While some sectors, like consumer staples and gold, are holding strong, growth stocks are struggling. As always, long-term investors should stay focused on their financial goals and not let short-term volatility drive their decisions.