WSJ What’s News - U.S. Stocks Fall Sharply as Consumer Sentiment Sours in March

Episode Date: March 28, 2025

P.M. Edition for Mar. 28. Stocks sold off after hotter-than-expected inflation data, President Trump's tariff announcements and souring consumer sentiment. But does consumer sentiment actually mean a change in consumer behavior? Economics reporter Justin Lahart joins us to discuss. Plus, cloud computing startup CoreWeave made its highly anticipated IPO today turned into a high-profile stumble. Corrie Driebusch, who covers finance for the Journal, tells us what this means for artificial-intelligence companies, and for IPOs more broadly. And President Trump has embarked on a sweeping deregulatory drive. Reporter Scott Patterson explains what sectors are feeling the effects, and what investors make of it. Alex Ossola hosts. Bad Bets podcast Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

With the Fizz loyalty program, you get rewarded just for having a mobile plan. You know, for texting and stuff. And if you're not getting rewards like extra data and dollars off with your mobile plan, you're not with Fizz. Switch today. Conditions apply. Details at fizz.ca. U.S. stocks sell off after consumer sentiment sours in March. But will consumer behavior change? off after consumer sentiment sours in March.

But will consumer behavior change? Plus, CoreWeave's stock market debut turns into a high profile stumble for both the AI industry and new public listings. And President Trump is following through on his pledge of sweeping deregulation. Deregulation takes a while to work its way into the system. So you're not going gonna really see a benefit to companies from deregulation for a while, whereas tariffs, inflation, interest rates, it's immediate, it's right now,

and that's what investors are reacting to. It's Friday, March 28th. I'm Alex Oseleff for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. U.S. stocks sold off today after reports of lower consumer sentiment, hotter-than-expected inflation and anticipation of Trump's announcement of further tariffs next week. Major U.S. indexes ended the day lower. The Dow fell more than 700 points, or about 1.7%.

The S&P 500 dropped about 2%, down for the week for the fifth time in the last six weeks. The Nasdaq tumbled 2.7%. New data from the Commerce Department show that U.S. personal income and consumption both rose in February. The personal consumption expenditures price index, which the Fed uses to track inflation, rose 0.3% over the previous month and has climbed by 2.5% over the past 12 months, still above the Fed's 2% target. The core version of PCE inflation, excluding food and fuel,

is up 2.8% over the past 12 months. That's an increase from January. Meanwhile, consumers took a gloomier view of the economy in March. According to the University of Michigan's monthly survey of consumer sentiment, the headline index came in at 57 this month. That's the lowest level since 2022

and a decline from 64.7 in February. Two-thirds of consumers said that they expect higher unemployment in the next year, the highest reading since 2009. The numbers are the latest sign that consumers are feeling less optimistic about the economy. But does that translate into actual changes

in consumer behavior? Here to tell us more about what this means is economics reporter Justin Layhart. Justin, what are some of the factors that are making consumers feel more negative about the economy? A lot of it is just the headlines that you've been seeing. Tariffs, government layoffs, spending cuts,

maybe immigration restrictions. You also have to consider with these measures of sentiment. They ask you, how are you doing? What are you seeing out there? So they can pick up things that maybe are happening on the ground that we're not seeing in the main economic data as of yet. What kind of indicators do we look at to see if the sentiment

turns into actual behavior? We're going to be watching any kind of spending report, any kind of indicators do we look at to see if the sentiment turns into actual behavior? We're going to be watching any kind of spending report, any kind of sales data. We definitely have seen some weakening in those measures this quarter so far. There was a decline in spending in January. People chalked that up to whether to the Los Angeles fires. People thought, oh, you know, it's going to bounce back. It did bounce back a little bit in February, but not that much. So we've seen economists are marking down their forecasts of gross domestic product.

Morgan Stanley, for example, they're at 0.4% growth for the first quarter, that's pretty weak. So these surveys may be telling you something about what's happening. That was WSJ Economics reporter, Justin Leihart. Thanks, Justin. Thank you. It was supposed to be one of the splashiest IPOs of the year.

Now CoreWeave stock market debut is turning into a high-profile stumble. The startup that rents out access to NVIDIA chips priced its initial public offering below expectations late yesterday and opened even lower today. In the end, its shares closed flat. Corrie Drebusch, who covers finance for the journal, is here now to discuss. Corrie, what went wrong for CoreWeave? A lot went wrong. It just ends up being a question of timing when it comes to IPOs, and often it's as

simple as that. When you think about when a company started looking at an IPO, it's usually at least a year before they actually list their shares. A year ago, anyone with AI in their name, the stock was going up, up, up. And that sentiment has cooled a lot over these past 12 months. Markets are down today. Is this just bad luck for the company or does it say something broader about how other AI companies could potentially perform in the market?

Yes. And I know I started out by saying that just poor timing, but there are company-specific issues. And investors said, no, we don't really want to pay that much. And they also had concerns about the sustainability of the AI boom. And obviously, companies right now are spending hundreds of billions of dollars on AI, but how sustainable is that? Just thinking more broadly about IPOs, I mean, this is not the first IPO this year

that has not lived up to expectations. What does CoreWeave's IPO tell us about listings this year? Obviously, every IPO is a little different, but in general, bankers had really hoped that 2025 was going to be this return to normal for the IPO market. Instead, we've seen quite a few IPOs not do as well, and it's not all IPOs, but these are the bigger ones that have struggled. You think GasExport or Venture Global in January. Another big IPO of the year was cybersecurity firm CellPoint, and that has also struggled since its IPO for

its shares. And now there is CoreWeave. So it's not that all IPOs are doing poorly, but when you see a few of the three biggest in the US not do so hot. It does cause some companies and their backers to maybe say, let's pause. Other companies are still in the pipeline, still waiting to go, but we're going to have to wait and see how that goes. That was WSJ Finance reporter, Kori Driebusch. Thank you, Kori. Thanks.

And more on that series of powerful earthquakes that rocked Myanmar and Thailand that we told you about in this morning's show. Myanmar authorities said that as of Friday evening, 144 people were confirmed dead, more than 700 were injured, and that the toll was expected to rise. firm dead, more than 700 were injured, and that the toll was expected to rise. Thai authorities said that at least three people were killed in Bangkok, and dozens were injured when a high-rise building collapsed at a construction site. Coming up, what investors make of President Trump's efforts at deregulation. That's after the break. You know that feeling when you find the perfect song? Imagine that, but for your next meal at Tim's.

Whether you're craving something meaty, cheesy, or just straight up satisfying, make a meal of it with Tim's new 3-Meat Hat-Trick Flatbread Pizza, loaded with pepperoni, bacon, and sausage crumble. Pair it with our new garlic bread and a refreshing peach lemonade quencher for a meal that just hits. Order on the Tim's app today at participating restaurants in Canada for a limited time. It's time for Tim's. As he promised, President Trump is ushering in one of the most sweeping deregulatory drives

in modern U.S. history. Take the Environmental Protection Agency, which has so far seen the most aggressive plans for red tape rollback. In a single day, the EPA announced 31 actions to deregulate U.S. environmental policies, including rules for power plants, the oil and gas industry, electric vehicles, and wastewater. Scott Patterson, who covers the Trump administration for the journal, joins me now. Scott, what are some of the industries affected by the president's deregulation efforts? It probably would be shorter to say what industries aren't affected. The biggest ones are the chemical industry, rolling back oversight of toxic chemicals and the pollution that they can cause. Oil and gas industry, finance, banking. It's across the board though. That's why you know we're saying

that this is probably the most sweeping deregulatory effort in modern times according to analysts and experts that we talked to. And it's also just beginning. A lot of what we're seeing right now are just promises and plans to roll back regulations. So that's something to keep in mind is these things aren't always that easy to unwind, these rules. They can take time. The Trump administration seems to be sending mixed signals here. On the one hand, this deregulation effort, which is welcomed by businesses, and on the other, introducing tariffs, which they're not so happy about. How are investors approaching this?

Yeah, after the election, stocks took off. Investors were very excited and happy. They thought that this would be great for profits for corporations. But then the inauguration happened and Trump started talking about tariffs and the stock market started tanking. That is really what has interrupted the animal spirits that people expected to see as a result of this deregulatory effort. Ironically, one of the places that seems to be most upset about tariffs is the oil and

gas industry, which celebrated Trump's election. I was at a meeting in DC with oil and gas executives soon after the election and I never saw so many smiling faces in my life. But now there seems to be a lot of anger about the tariffs in the oil and gas industry because it's making their business more expensive. The stuff, the gear, the rigs that they use to drill is getting more expensive. Inflation, it's just across the board. The tariffs are going to make interest rates higher.

We saw the Federal Reserve recently say that they're likely going to maintain high interest rates for the foreseeable future because of the Trump administration's tariff policy. That's a much bigger deal for investors than deregulation because it's immediate. Deregulation takes a while to work its way into the system. So you're not going to really see a benefit to companies from deregulation for a while, whereas tariffs, inflation, interest rates, it's immediate.

It's right now, and that's what investors are reacting to. That was WSJ reporter Scott Patterson. Scott, thanks for being here. Thank you. President Trump has pardoned Nikola founder Trevor Milton, who has been convicted of fraud in federal court for what prosecutors said were his lies to investors about his zero emission trucks. If you want to hear more about Trevor Milton and Nikola's downfall, we did an

entire season about it on our Bad Bets podcast. We'll leave a link in the show notes. And law firms Jenner & Block and Wilmer Hale filed separate lawsuits in a Washington, D.C. federal court today. They're an effort to block White House executive orders that targeted them for their ties to lawyers involved in an investigation into Russian interference in the 2016 election. The suits allege that the administration engaged in unconstitutional retaliation that violates the First Amendment. Meanwhile, another law firm, Skadden, cut a deal to avoid being targeted by the Trump administration. And that's What's News for this week. Tomorrow, you can look out for our weekly markets wrap-up, What's News in Markets.

Then on Sunday, as President Trump's Liberation Day approaches on April 2nd, when the newest slate of tariffs kicks in, we're looking into the effectiveness of tariffs in the past and how this could help us understand the administration's strategies. That's in What's News Sunday. And we'll be back with our regular show on Monday morning. Today's show was produced by Pierre Bienamé and Anthony Bansi, with supervising producer Michael Kosmides. Michael Laval wrote our theme music. Aisha El-Muslim is our development producer, Scott Salloway and Chris Inslee are our deputy editors,

and Philana Patterson is The Wall Street Journal's head of news audio. I'm Alex Osila. Thanks for listening.