NEW YORK — U.S. stock markets faced another decline on Tuesday as household sentiment regarding the economy became increasingly negative due to issues such as inflation, tariffs, and the impact of federal policies.
The S&P 500 index saw a drop of 0.4% during afternoon trading, following a three-day losing trend despite previously reaching a historic peak last week. The Nasdaq composite fell by 1% as of 1:01 p.m. Eastern Time, while the Dow Jones Industrial Average slightly rose by 157 points, or 0.3%, setting it apart.
The plunge in U.S. stock markets picked up momentum from midweek, following a series of economic reports that fell short of expectations. The latest news revealed a drop in consumer confidence to levels lower than economists anticipated.
Despite this, the U.S. economy shows signs of continued growth. However, for the first time since June, consumer expectations for short-term economic conditions dipped below a key threshold that often signals an impending recession, noted The Conference Board. This wave of pessimism was widespread, affecting various demographics across income levels and age groups.
“There was a significant surge in discussions about trade and tariffs, reaching a peak not seen since 2019,” stated Stephanie Guichard, a senior economist at The Conference Board. Comments pertaining to the current administration and policies were notably prevalent.
The White House suggests that declining consumer confidence reflects concerns over the current administration, pointing instead to recent announcements from companies like Apple and indicators of CEO confidence as signs of future economic growth.
Consumer spending is a critical driver of the U.S. economy and is closely monitored by Wall Street. Tuesday’s findings aligned with previous reports from the University of Michigan, indicating consumers view the present state as satisfactory but harbor concerns for the future.
Within the S&P 500, major losses were led by high-flying stocks that were previously favorites on Wall Street. Nvidia and Tesla saw significant decreases of 1% and 8.1%, respectively.
Bitcoin took a hit as well, dropping below $88,000, impacting the stocks of companies involved in the cryptocurrency sector. MicroStrategy, now rebranded as Strategy after investing heavily in Bitcoin, plunged 11.6%.
Zoom Communications experienced an 8.6% decline, despite exceeding earnings projections for the latest quarter. UBS analysts attributed this to the company’s slightly underwhelming revenue growth forecast for the coming year.
Helping balance the declines, Home Depot saw a 4.8% rise following stronger-than-anticipated quarterly profits, although CEO Ted Decker mentioned ongoing economic uncertainty and rising interest rates, which impact customer spending on home renovations. Home Depot’s performance buoyed the Dow, largely composed of only 30 stocks, significantly outperforming broader market measures like the S&P 500.
Though more stocks on Wall Street rose than fell, the gains were primarily among smaller firms, less influencing indices like the S&P 500 compared to tech giants such as Nvidia.
Keurig Dr Pepper advanced 3.2% after revealing better-than-expected year-end results, showing robust growth in U.S. compared to international markets affected by foreign currency shifts.
The pace of earnings reports is slowing, but much anticipation surrounds Nvidia’s upcoming report on Wednesday. Nvidia has become pivotal on Wall Street due to the continuously strong demand for its chips. This report will be the first after DeepSeek, a Chinese competitor, announced a large language model capable of rivaling major U.S. firms without relying on high-end chips.
This casts doubts on expected investments in Nvidia’s products and the wider AI infrastructure, including data center power capabilities.
In the bond market, Treasury yields fell as investors flocked to safer assets amid concerns over the U.S. economy. Yields have been erratic since uncertainties arose about policies under President Donald Trump concerning tariffs, immigration, and taxation, all of which could impact the global market.
The administration has taken positions diverging from traditional allies, abstaining from holding Russia accountable for Ukraine conflict resolutions. Trump’s tariff threats continue to perturb international trade relations, with impending increases on goods from Canada and Mexico.
The 10-year Treasury yield dropped to 4.30% from Monday’s 4.40%, a significant variation for bond markets.
Internationally, stock markets saw varied movements, with European indices experiencing mixed results and declines across much of Asian markets. Japan’s Nikkei 225 fell 1.4% after markets reopened following a Monday holiday.
