Wall Street Sinks as Consumer Confidence Drops, Tariff Worries Mount/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stocks slipped Tuesday as consumer confidence fell more than expected, raising recession concerns. The S&P 500, Dow, and Nasdaq all declined, with high-growth stocks like Nvidia and Tesla dragging markets lower. Trump’s trade policies and rising tariffs added to investor anxiety.
Market Quick Looks
- S&P 500: -0.7% after three-day losing streak
- Dow Jones: -78 points (-0.2%)
- Nasdaq Composite: -1.4%
- Consumer confidence index falls below recession-warning threshold
- High-growth stocks hit:
- Nvidia: -3.3%
- Tesla: -5.8%
- Bitcoin tumbles to $87,000; crypto stocks plunge
- Home Depot: +3% (beats earnings but warns on 2025 outlook)
- Keurig Dr Pepper: +3.9% (strong U.S. growth offsets global currency headwinds)
- Bond market: 10-year Treasury yield down to 4.29%
- Global markets: Mixed in Europe, Tokyo’s Nikkei 225: -1.4%
Wall Street Sinks as Consumer Confidence Drops, Tariff Worries Mount
Deep Look
NEW YORK — Wall Street extended its losing streak Tuesday as U.S. consumer confidence plunged and concerns over tariffs and inflation dampened market sentiment. The S&P 500 dropped 0.7%, following a three-day slide after reaching record highs last week. The Dow Jones Industrial Average slipped 78 points (-0.2%), and the Nasdaq Composite tumbled 1.4%.
“Consumers are growing more pessimistic, and that’s beginning to ripple through markets,” said Stephanie Guichard, Senior Economist at the Conference Board.
Consumer Confidence Hits Recession Warning Zone
The Conference Board reported a sharper-than-expected decline in consumer sentiment. Its short-term expectations index fell below 80, a level often signaling an impending recession.
- Key concerns:
- Persistent inflation pressures
- Trade tensions fueled by Trump’s tariff threats
- Higher mentions of tariffs than at any point since 2019
“The uptick in tariff concerns mirrors 2019 levels,” Guichard noted, highlighting the resurgence of trade-related anxieties.
Market Movers: Tech Stocks and Retailers Diverge
High-growth tech stocks were hit hard:
- Nvidia: –3.3% ahead of Wednesday’s earnings report
- Tesla: -5.8% amid broader tech selloff
- Zoom: -9.3% despite strong quarterly results; guidance disappointed
On the other hand, some retail giants outperformed:
- Home Depot: +3% after beating earnings forecasts but warning of weaker 2025 projections
- Keurig Dr Pepper: +3.9% thanks to robust U.S. sales despite global currency pressures
AI and Chip Sector Eyes Nvidia Earnings
Markets are bracing for Nvidia’s earnings on Wednesday, its first report since Chinese competitor DeepSeek unveiled an AI model that rivals U.S. tech without premium Nvidia chips.
“If Nvidia’s growth stumbles, the broader AI-driven rally could lose steam,” said analyst Daniel Cho at MarketEdge Research.
Bitcoin and Crypto Stocks Slide
Bitcoin plunged below $87,000, pulling crypto-related stocks down:
- MicroStrategy (Strategy): -9.9% amid declining Bitcoin prices
- Crypto market sentiment weakened as regulatory uncertainty persists
Global Trade Tensions Escalate
Investors remain wary of Trump’s tariff policies:
- Tariff hikes on Canadian and Mexican imports set to proceed after a one-month delay
- European markets mixed, reacting to U.S. trade stance and consumer data
- Tokyo’s Nikkei 225: -1.4% after returning from a holiday
“Global markets are adjusting to heightened trade risks,” said economist Maria Sanchez.
Bond Market and Global Yields
- 10-year Treasury yield: Fell to 4.29% (from 4.40%), reflecting risk-off sentiment
- Investors are seeking safer assets amid market volatility and recession fears
Economic Outlook
While the U.S. economy showed resilience late in 2024, signs of softening consumer demand and heightened trade tensions raise recession risks for 2025. Market watchers are focused on:
- Nvidia’s earnings as an AI sector bellwether
- Trump’s evolving trade policies and their global implications
- Consumer spending trends post-holiday season
“Markets are navigating a perfect storm of weaker sentiment, policy uncertainty, and inflationary pressures,” said portfolio manager Elena Lee.
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