On Tuesday, Wall Street saw a dip in stock prices. Investors reacted to disappointing news about consumer confidence, which raised worries about the potential impact of tariffs from Donald Trump on the economy.
The S&P 500 dropped by 0.5%, while the Nasdaq Composite fell by 1.4%. Although stocks had initially experienced a surge after Trump’s election in November, fueled by expectations of business-friendly policies, recent reports have shifted the momentum. The S&P 500 has now declined for four consecutive days.
A key report from the Conference Board revealed that consumer confidence fell by seven points in February, landing at 98.3. This is the largest drop since August 2021 and much lower than the expected 102.5. Notably, consumers’ short-term outlook for the economy has dipped below levels typically associated with a recession.
Inflation expectations over the next year also rose, reaching 6%, up from 5.2%. Stephanie Guichard, a senior economist at the Conference Board, linked this increase to rising prices of essential goods, like eggs, along with concerns regarding tariffs. She noted that discussions about trade issues and tariffs have become more prevalent among respondents to the survey.
JPMorgan economist Abiel Reinhart shared similar views, suggesting that political news is influencing consumer sentiment negatively.
Charlie McElligott, a strategist at Nomura, indicated that investors are feeling uneasy about the increasing negative economic indicators and the uncertainty stemming from Trump’s tariff announcements. He pointed out that investors are turning to options—financial tools that could gain value if the S&P 500 continues to fall.
Stocks usually seen as safe bets, like Dr Pepper and Colgate-Palmolive, rose over 2% as investors sought steadier ground. Real estate stocks also performed well, benefiting from lower interest rates.
Conversely, tech stocks, which have thrived during economic booms, faced losses. Notable drops included Palantir at 3.2%, AppLovin at 5.9%, and Tesla, which slid 8.4%, bringing its market value below $1 trillion.
As for crude oil, fears from these economic reports contributed to a drop in prices. Brent crude fell 2.1% to $73.20 a barrel, while West Texas Intermediate dropped 2.2% to $69.13. Robert Yawger of Mizuho Securities described the low consumer confidence as a “demand destruction event” for oil and gasoline.
In summary, shifting investor sentiment and various economic indicators are painting a cautious picture for the market. Economic unpredictability is prompting a defensive approach among many investors.
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