U.S. stocks struggled on Tuesday as mounting economic uncertainties and a sharp drop in consumer confidence fueled a selloff. The S&P 500 and the Nasdaq Composite fell to one-month lows, with investors wary of potential economic headwinds stemming from President Donald Trump’s policies.
Consumer Confidence Takes a Hit
The Conference Board’s Consumer Confidence Index registered its steepest monthly decline since August 2021, reflecting growing concerns about economic conditions. The near-term expectations component plummeted by 11.3%, falling well below levels historically associated with an impending recession. This downturn signals increasing anxiety among American consumers, who drive nearly 70% of U.S. GDP.
“This is clearly a risk-off day and a continuation of a risk-off month,” said Peter Tuz, president of Chase Investment Counsel. “Many companies are expressing caution about the direction of consumer spending, and today’s confidence report underscores those concerns.”
Market Volatility on the Rise
The CBOE Volatility Index (VIX), often referred to as Wall Street’s “fear index,” spiked to its highest level since January 27, highlighting investor uncertainty. Federal Reserve officials have called for a cautious approach to monetary policy, with futures markets indicating that interest rates are likely to remain steady through mid-2025.
The S&P 500 closed down 0.46% at 5,955.92, while the Nasdaq Composite tumbled 1.33% to 19,029.56. In contrast, the Dow Jones Industrial Average defied the trend, rising 0.37% to 43,622.95.
Tech Stocks Slide as Nvidia Drops Ahead of Earnings
Nvidia (NVDA) saw a decline ahead of its highly anticipated earnings report, dragging down the Philadelphia Semiconductor Index. Meanwhile, U.S. officials are reportedly considering tighter restrictions on Nvidia’s AI chip exports to China, a move that could further weigh on the company’s future revenue streams.
Bitcoin’s recent weakness also impacted crypto-related stocks, with Coinbase (COIN) and MicroStrategy (MSTR) both facing losses. The decline in digital asset prices comes amid heightened inflation concerns and Federal Reserve policy uncertainties.
Earnings Reports and Mergers Move Individual Stocks
- Zoom Communications (ZM) slipped after issuing a weaker-than-expected annual revenue forecast.
- Li Auto (LI) soared following the announcement of its first electric SUV, signaling its expansion into the competitive EV market.
- Eli Lilly (LLY) gained after launching higher-dose vials of its weight-loss drug Zepbound at a discounted price compared to its injector-pen versions.
- Solventum (SOLV) surged as Thermo Fisher (TMO) announced plans to acquire its purification and filtration business in a $4.1 billion deal.
Looking Ahead
Investors remain on edge as they await Nvidia’s earnings report, which could set the tone for the broader tech sector. With rising geopolitical tensions, economic policy uncertainties, and weakening consumer confidence, market participants are bracing for continued volatility in the weeks ahead.
