Stocks dropped Friday as worries about the economy compounded risk aversion linked to fear of tariffs. The Dow Jones industrial average fell 1.7 percent, the S&P 500 lost 2.0 percent, and the Nasdaq was down a nasty 2.7 percent. US bond yields fell and the dollar rose as investors moved to safer assets. Oil fell on worries about slowing global demand.

Risk assets dropped on news that core PCE prices rose by 0.4 percent on the month and by 2.8 percent on year, more than the market expected, renewed worries that inflation remains too persistent to allow rate cuts. Stocks also were hit by news that consumer sentiment dropped again in the final March reading, more than the market expected, while consumer inflation expectations rose. The gloomy economic reports came in addition to the market's rising dread of President Trump's tariff plans, with more tariffs expected to be unveiled next week.

Among sectors, megacaps had another bad day with losses nearly across the board. Only health care and utilities held up relatively well

Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.

Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.