Dow Jones: 400-Point Drop as Weak Consumer Sentiment and UnitedHealth Hit US Stocks

Dow Drops 400 Points as Weak Consumer Sentiment and UnitedHealth Slump Weigh on Markets

Stocks fell sharply on Friday, with the Dow Jones Industrial Average dropping 394 points, or 0.8%, after disappointing consumer sentiment data and a steep decline in UnitedHealth shares. The S&P 500 lost 0.6%, while the Nasdaq Composite slipped 0.7%, capping off a turbulent week for Wall Street.

What Drove the Dow Lower?

UnitedHealth shares tumbled more than 9%, marking their worst day since March 2020, following a Wall Street Journal report of a Justice Department investigation into the insurer. The steep drop was a significant drag on the Dow, contributing to the index’s sharp decline.

Adding to market woes, the University of Michigan’s consumer sentiment index fell to 64.7 in January, a 10% decline and well below expectations. The report highlighted growing consumer anxiety over inflation, with the five-year inflation outlook hitting 3.5%, the highest level since 1995.

Tom Fitzpatrick, managing director at R.J. O’Brien and Associates, expressed concern over the data, noting, “It’s still early, but looking at these things and the way fixed income is trading is suggesting things are not as rosy as people thought.”

Which Sectors Struggled Most?

The industrials sector led losses, down 1.42%, followed by consumer discretionary stocks, which fell 1.13%. The technology sector also dropped 0.71%, adding to the broad-based decline.

Energy stocks slid 0.72% as oil prices wavered, while materials and real estate sectors were off 0.73% and 0.57%, respectively. Health care stocks dropped 0.31%, largely impacted by UnitedHealth’s slump.

On a brighter note, consumer staples rose 0.31%, and financials edged up 0.04%, providing some stability amid broader market weakness.

How Did Economic Data Influence Market Sentiment?

Investors were rattled by fresh data showing a slowdown in U.S. manufacturing and services activity. The S&P Global manufacturing PMI came in at 51.6, meeting expectations, but the services PMI unexpectedly dropped to 49.7, its lowest level in over two years.

S&P Global attributed the decline to rising uncertainty over business conditions, including concerns about federal policies on domestic spending and tariffs.

What’s Next for the Market?

With inflation fears back in focus, traders will closely watch upcoming economic reports, including the latest Consumer Price Index (CPI) and Producer Price Index (PPI) data. Earnings season also continues, with major retailers set to report, offering further insights into consumer spending and economic resilience.

Investors are likely to remain cautious, with market sentiment hinging on whether incoming data confirms a softening economic outlook or offers signs of stability.

More Information in our Economic Calendar.