Health of US economy raises alarm bells as S&P 500, Nasdaq end in red

Wall Street ended the second session of the week in mixed territory, with stocks pressured by a report on U.S. consumer confidence in February .

THE S&P 500 gave way 0.47 % for 5,955.26 points, while the technology-driven Nasdaq Composite fell 1.35 % to 19,026.39 points, compounding four-day declines to about 5%, the most since early September. The Dow Jones industrial average gained 0.37 % to 43,620.97 points .

The Conference Board revealed this Tuesday that the indicator had its biggest drop since August 2021. In addition, expectations for inflation in the next 12 months have soared and the reason is none other than fears about the effect on the economy of the policies of the North American President, Donald Trump.

This data comes after reports on retail sales, services and housing failed to encourage the market. In fact, traders have been increasing their bets on interest rate cuts by the Federal Reserve this year, even as inflationary pressures show signs of rising.

“The market seems to be more concerned about growth than inflation,” Chris Verrone of Strategas explained to Bloomberg.

Wall Street's most optimistic investors have sought solace in the one area that has remained unshaken for two years: megacaps. However, the sector has once again disappointed, pressured by Donald Trump's alleged new sanctions on Chinese semiconductors and doubts about whether companies' spending on artificial intelligence is paying off.

A day before reporting 2024 results, Nvidia ended the session down 2.22%. The US giant's numbers are the most closely watched barometer of the AI ​​boom. Investors will scrutinize the company's earnings projections, as well as revenue and sales, but will also listen closely to what CEO Jensen Huang has to say about the company's future prospects.

Adding to the tech sector's pessimism, Tesla plunged 8.4% after sales in Europe fell by around 45% in January.

For more clues about the U.S. economy, the market is now waiting for the PCE report, the personal consumption expenditures index, released this Friday. This is the Federal Reserve's favorite indicator for measuring inflation and "will give more indications about how consumers are feeling about their purchasing power", say analysts consulted by Bloomberg.