Stocks struggled on Tuesday, with the S&P 500 and the Nasdaq touching one-month lows as a dour U.S. consumer confidence report added to mounting economic uncertainties.
The S&P 500 and the Nasdaq both notched their fourth consecutive sessions in the red, while the Dow ended the day modestly higher. Canada’s main stock index rose modestly with the help of stronger-than-expected bank earnings.
“This is clearly a risk-off day and a continuation of a risk-off month,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. “Many companies are expressing caution about the direction of consumer spending at the moment and today’s consumer confidence number bears that out.”
The mood of the consumer, who props up about 70% of U.S. GDP, has dimmed considerably in February, according to The Conference Board’s consumer confidence index, which registered its steepest monthly drop since August 2021.
Rising consumer uncertainties were laid bare by an 11.3% plunge in the near-term expectations component, well below the level associated with impending recession, suggesting Americans are growing anxious about the potential negative economic impact of the policies of President Donald Trump’s administration.
Tuz said the political environment was not helping.
“Headlines have been pretty dramatic ... and as a result consumers and maybe businesses are sitting on their hands to see how things shake out before making major purchasing decisions or other business decisions,” Tuz said. “There are just lots of reasons to put off buying things today, including stocks.”
Richmond Federal Reserve President Tom Barkin said on Tuesday that current uncertainties call for a measured, cautious approach to monetary policy.
Interest-rate futures imply the U.S. Federal Reserve will hold its key interest rate steady for the first half of the year, according to data compiled by LSEG.
The CBOE market volatility index, widely known as the “fear index,” spiked to its highest level since Jan. 27.
Bitcoin, often viewed as a barometer of investor risk appetite, dropped 6.1%.
The Dow Jones Industrial Average rose 159.95 points, or 0.37%, to 43,621.16, the S&P 500 lost 28.00 points, or 0.47%, to 5,955.25 and the Nasdaq Composite lost 260.54 points, or 1.35%, to 19,026.39.
The S&P/TSX composite index ended up 52.72 points, or 0.2%, at 25,203.98, clawing back some recent losses. On Friday, the TSX posted its lowest closing level since Jan. 17.
Heavily weighted financials advanced 0.8% as Bank of Nova Scotia and Bank of Montreal beat analysts’ expectations for quarterly profit. Shares of BMO rose 4.7%, while Scotiabank was down 1.2%.
Consumer staples added 1.6%, helped by a gain of 10.6% for Maple Leaf Foods Inc after the company’s fourth-quarter earnings beat estimates.
Real estate and utilities gained ground as bond yields fell. The Canadian 10-year yield touched a near three-week low at 2.979%. Technology lost 1.2%, with shares of electronic equipment firm Celestica Inc down nearly 4%.
Energy was also a drag, falling 1.6%, as the price of oil fell to a two-month low on weak economic news from the U.S. and Germany that fed fears of slower energy demand. U.S. crude oil futures settled down 2.5% at US$68.93 a barrel.
The Canadian dollar weakened to a near two-week low against its U.S. counterpart as oil prices fell and investors grew more worried that U.S. trade tariffs will be implemented.
The loonie was trading 0.3% lower in late afternoon trading at 1.43 to the U.S. dollar, or 69.93 U.S. cents.
The Canadian currency started weakening late Monday when U.S. President Donald Trump said that tariffs on Canadian and Mexican imports are “on time and on schedule” despite efforts by the countries to beef up border security and halt the flow of fentanyl into the U.S. ahead of a March 4 deadline.
In the U.S. stock market Tuesday, Tesla’s stock tumbled 8%, pushing its market value below US$1 trillion for the first time since November after data showed the electric car maker’s sales slumped in Europe in January.
Among the 11 major sectors in the S&P 500, communication services fell the most, with consumer staples enjoying the biggest percentage gains.
Nvidia dropped 2.8% ahead of the chipmaker’s much-anticipated quarterly earnings report, expected after the bell on Wednesday, pulling the Philadelphia SE Semiconductor index down 2.3%.
U.S. officials, in a bid to restrict Beijing’s technological capabilities, are aiming to restrict the quantity and types of Nvidia chips that can be exported to China without a license, according to a Bloomberg report.
Bitcoin weakness weighed on crypto stocks. Coinbase and MicroStrategy dropped 6.4% and 11.4%, respectively.
Zoom Communications slid 8.5% following its disappointing annual revenue forecast.
U.S.-listed shares of Li Auto jumped 13.2% after the company unveiled its first electric SUV.
Eli Lilly rose 2.3% after the drugmaker said it has begun selling higher doses of its weight-loss drug Zepbound in vials in the U.S., at a discount to the injector-pen versions.
Solventum jumped 9.5% after drug manufacturer Thermo Fisher said it will buy the company’s purification and filtration business for about $4.1 billion.
Advancing issues outnumbered decliners by a 1.2-to-1 ratio on the New York Stock Exchange. There were 89 new highs and 163 new lows on the NYSE.
On the Nasdaq, 1,720 stocks rose and 2,714 fell as declining issues outnumbered advancers by a 1.58-to-1 ratio. The S&P 500 posted 31 new 52-week highs and eight new lows while the Nasdaq Composite recorded 44 new highs and 305 new lows. Volume on U.S. exchanges was 16.32 billion shares, compared with the 15.32 billion average for the full session over the last 20 trading days.
Reuters, Globe staff