Stagflation Fears Knock US Stocks Amid Trade War Woes

A concerning economic report revealed a potential shrinkage in the US economy, impacting stock markets as fears of stagflation rise due to trade war uncertainties. Key stock indexes fell, with the S&P 500 breaking its winning streak. The situation complicates the Federal Reserve's response strategies.

In a striking turn of events, a recent economic report suggested that the US economy may have contracted at the year's start, adding pressure on stock markets already reeling from President Trump's trade policies.

The S&P 500 index dropped by 2% in the morning session, with the Dow Jones plunging 702 points, as tensions around tariffs unsettled various sectors, particularly artificial intelligence.

Economists warn of looming stagflation, a scenario where slow growth and high inflation coexist, leaving the Federal Reserve in a policy predicament.

(With inputs from agencies.)