Dow drops 700 points, S&P 500, Nasdaq sink as Wall Street reels from tariff, inflation fears

US stocks tanked on Friday as Wall Street grappled with President Trump's escalating trade war and weighed signs of reinvigorated inflation pressures amid souring consumer sentiment.

The Dow Jones Industrial Average dropped more than 700 points or nearly 1.7%, while the benchmark S&P 500 fell almost 2%. The Nasdaq Composite dropped 2.7% as tech stocks led the declines.

The major averages fell on Friday after the release of a hotter-than-expected Personal Consumption Expenditures index reading, which includes the Federal Reserve's preferred inflation gauge of "core" PCE. The reading showed prices increased more than expected last month, rising 0.4% month over month and 2.8% year over year, continuing a stubborn plateau on the path to the Fed's 2% target.

Meanwhile, US consumer sentiment in March plummeted to its lowest level since November 2022. The latest reading from the University of Michigan came in at 57, down from a 64.7 reading in the prior month, as consumers fretted about inflation and the broader economy, perhaps most notably in the labor market.

On Friday President Trump said he had a "very good talk" with Canadian Prime Minister Mark Carney, his first conversation with him since Carney was elected earlier this month. When asked about tariffs however, the president said he will "absolutely" follow through with levies against the country.