The S&P 500 experienced a decline on Tuesday as market participants processed disappointing economic indicators and recent tariff remarks from President Donald Trump, raising apprehensions regarding the health of the U.S. economy. The broad market index experienced a decline of 0.3%, whereas the Nasdaq Composite recorded a decrease of 0.4%. The Dow Jones Industrial Average experienced a decline of 52 points, representing a decrease of 0.1%. The market has experienced significant volatility in recent days, as evidenced by the Dow’s decline of over 500 points. On Friday, the most recent jobs report indicated that the labor market has been deteriorating for several months. The blue-chip index subsequently rebounded from those losses on Monday, experiencing a surge of nearly 600 points.
The indexes experienced a decline on Tuesday following the stagnation of the ISM Services index in July, which has intensified concerns regarding stagflation that were already heightened by the recent employment data. Stagflation denotes a situation characterized by elevated inflation alongside diminished employment levels. Services constitute approximately 70% of the U.S. economy, indicating that a deceleration in this sector may signal challenges on the horizon.
Equities faced pressure as Trump indicated that tariffs on semiconductors and pharmaceuticals would be implemented shortly. “We’re going to be announcing on semiconductors and chips, which is a separate category, because we want them made in the United States,” Trump stated, adding that he’ll unveil the new plan “within the next week or so.”
Palantir emerged as a notable performer today, with shares increasing by 7% following the defense technology company’s announcement that its revenue exceeded $1 billion for the first time. Conversely, prominent industrial entity Caterpillar reported an earnings miss, resulting in a decline in shares earlier in the session. The equity was last observed to be slightly elevated. Eaton shares experienced a decline of 6% as a result of underwhelming guidance.
“Today we’re observing a slight market pullback, [but] equities have experienced a commendable upward trajectory. “We’re probably due for a period of consolidation, some backing and filling, so to speak,” stated Terry Sandven, chief equity strategist at U.S. Bank Asset Management. “Clearly, valuations are elevated.” This market cannot be characterized as inexpensive. Sandven noted that “inflation is benign, interest rates are in the cusp of going lower and earnings are trending higher,” which he believes “presents a favorable backdrop for a risk-on bias.”