Wall Street's main indexes took a step back Friday, as fresh data highlighted an uptick in underlying price pressures that surpassed expectations, igniting concerns that the Trump administration's tariff strategies might further fan the flames of inflation.

At 1:22 p.m. EST, the Dow Jones Industrial Average fell 723.54 points, or 1.71%, the S&P 500 lost 111.86 points, or 1.96%, and the Nasdaq Composite lost 469.00 points, or 2.64%.

A Commerce Department report showed the Personal Consumption Expenditures Price index rose in line with what economists polled by Reuters were expecting.

However, excluding volatile items such as food and energy, the index rose more than expected on an annual basis in the previous month, while consumer spending rebounded after falling in January.

Equities have endured pronounced downturns over the past month, fueled by apprehensions that President Donald Trump's policies could usher the economy into an era of elevated inflation and sluggish growth, potentially casting a shadow over the Federal Reserve's monetary policy path.

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"This data further lends credence to the marginal shift we're seeing towards a more stagflationary environment," said Jordan Rizzuto, chief investment officer at GammaRoad Capital Partners.

"If inflation is picking up or running hotter coming into a period before we've actually seen the impact from tariffs, that's rather concerning."

Markets continue to anticipate that the central bank will reduce borrowing costs by 25 basis points for the first time this year in July, as per data gathered by LSEG.

Rate-sensitive banking giants such as Citi and Wells Fargo each slipped 0.5%.

Trump's unwavering commitment to a 25% tariff on auto imports, slated to commence next week, has reverberated through global markets, drawing criticism from lawmakers and industry leaders worldwide.

Auto stocks absorbed the impact of the previous session's selloff. General Motors slid 0.7%, while Ford inched down 0.8%.

All eyes are now on a fresh wave of tariffs the U.S. plans to unveil on April 2, with Trump hinting that these measures might deviate from the straightforward tit-for-tat levies previously promised.

In parallel, a report suggested that the European Union is contemplating concessions for Trump following the enactment of reciprocal tariffs.

The unpredictability surrounding tariffs has compelled companies to revise their annual forecasts downward, with Lululemon Athletica being the latest to adjust. Shares of the sportswear maker plunged 11.3%, dragging down the consumer discretionary sector.

Gold miners Harmony Gold and Gold Fields were up over 6% each, tracking higher gold prices.

The S&P 500 is confronting its first quarterly decline in six quarters, while the tech-heavy Nasdaq prepares for its most substantial quarterly drop in nearly two years.

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Investors will also parse through speeches by Federal Reserve policymakers Michael Barr and Raphael Bostic later in the day.

U.S. Steel rose 2.8% after a report said Nippon Steel and the company are in active talks about a deal that would preserve their $14 billion merger.

Declining issues outnumbered advancers by a 1.42-to-1 ratio on the NYSE and by a 1.91-to-1 ratio on the Nasdaq.

The S&P 500 posted four new 52-week highs and one new low, while the Nasdaq Composite recorded 22 new highs and 80 new lows.