In New York, some of Wall Street’s biggest names saw their luster diminish on Tuesday following a report suggesting growing pessimism among U.S. households regarding the economy.
The S&P 500 slipped 0.5%, plummeting as much as 1.2% earlier in the day. This marks the fourth consecutive decline for the primary indicator of U.S. stock market health, following a record high last week.
The Nasdaq composite dropped 1.4%, hindered by several major technology companies losing ground. However, most stocks still saw gains, helping the Dow Jones Industrial Average climb by 159 points, or 0.4%.
The U.S. stock market has been under pressure since mid-last week after weaker-than-expected economic reports affected Wall Street. The latest report on Tuesday revealed that consumer confidence is declining more significantly than economists had anticipated.
The U.S. economy remains relatively stable and continues to grow, but for the first time since June, a measure of consumer expectations about the short-term economy fell below a threshold commonly seen as a harbinger of recession, according to The Conference Board. This increased pessimism spread across various income levels and age groups.
Stephane Guichard, a senior economist at The Conference Board, noted a significant uptick in concerns related to trade and tariffs reminiscent of 2019 levels. Comments about the current administration and its policies were particularly prominent among responses.
Meanwhile, President Donald Trump’s White House suggested that the decreased confidence is a remnant from former President Joe Biden’s tenure. They highlighted Apple’s announcement to invest in new U.S. facilities and improved CEO confidence as signs of imminent growth.
Wall Street closely monitors consumer confidence because robust consumer spending has been a key factor in preventing a U.S. recession. Tuesday’s report echoed findings from a University of Michigan study, where consumers viewed the current situation favorably but expressed concerns about the future.
Pessimism particularly impacted high-momentum sectors that have recently enjoyed waves of enthusiastic investments. For example, Nvidia fell 2.8%, and Tesla plunged 8.4%, exerting the most significant pressure on the S&P 500.
Bitcoin also experienced a decline, sliding back towards $88,000 and weighing on companies in the crypto sector. MicroStrategy, which has increased funding to purchase more bitcoin—now operating under the name Strategy—fell 11.4%.
Zoom Communications dropped 8.5% despite reporting stronger than expected recent quarterly results. UBS analysts attributed this to the company’s revenue growth forecast for next year falling short of their estimates.
On the upside, Home Depot saw a 2.8% increase after achieving stronger-than-expected quarterly profits. Nevertheless, CEO Ted Decker mentioned ongoing challenges due to an uncertain economy and high-interest rates that limit consumer spending on home improvement projects.
Alongside Home Depot, most S&P 500 stocks saw gains. Homebuilders benefited from the potential for lower mortgage rates, with PulteGroup jumping 4.5%. However, compared to large tech companies like Nvidia, the small market value of homebuilders and retailers gives them less influence on the S&P 500 and other indexes.
In total, the S&P 500 decreased by 28.00 points to 5,995.25, while the Nasdaq composite dropped 260.54 to 19,026.39. The Dow Jones Industrial Average rose 159.95 to 43,621.16.
The rate of profit reports is tapering off, but a highly anticipated report from Nvidia is still to come on Wednesday. Nvidia, now considered one of Wall Street’s most influential stocks, has grown significantly due to nearly insatiable demand for its chips.
Wednesday will see the first earnings report for Nvidia and its CEO, Jensen Huang, since a Chinese startup, DeepSeek, stirred the AI industry by claiming the development of a competitive large language model without using costly chips.
This development raised questions about prior spending assumptions, not only regarding Nvidia’s chips but also for the broader AI ecosystem, including the electricity demand for large data centers.
In the bond market, Treasury yields pulled back as investors moved toward safer investments amid growing concerns about the U.S. economy. Yield fluctuations have been prevalent since President Trump’s election, given uncertainties about his tariff, immigration, and tax policies’ global economic effects.
Recently, President Trump intensified conflicts with trading partners, threatening to elevate tariffs, prompting them to retaliate with import taxes. On Monday, he confirmed advancing with tariff increases on Canadian and Mexican imports after a one-month delay.
The yield on the 10-year Treasury fell to 4.29% from 4.40% late Monday, a notable shift for the bond market. The drop is significant compared to January’s near 4.80%, reflecting growing anxiety about the economy’s future growth.
Internationally, stock indexes showed mixed results across Europe, while markets across much of Asia saw declines. Tokyo’s Nikkei 225 lost 1.4% after Japanese markets resumed trading post-Monday’s holiday.
