US Stocks Struggle amid Economic Concerns and Tariff Threats
Opening with a Dip
US stock markets opened the week on a positive note on Monday but quickly reversed course, slipping into the red. This decline came on the heels of dismal economic data and the persistent threat of tariffs, which have cast a pall of uncertainty over investors.
Consumer Pessimism and Economic Contraction
A recent survey revealed a heightened sense of pessimism among consumers, with worries about inflation resurfacing amidst President Donald Trump’s ongoing threats of broad tariffs. A separate economic report indicated a contraction in the services sector, which has been a robust performer in recent years. These concerns precipitated a rout in all three major US stock indexes last week, despite the S&P 500 setting consecutive record highs earlier in the week. The blue-chip Dow Jones Industrial Average ended up posting its steepest weekly loss since October.
Market Update
At 9:55 a.m. ET on Monday, the S&P 500 was down 0.096%, or 5.76 points, to 6,007.37. The Dow Jones Industrial Average had eked out a modest gain of 0.097%, or 42.34 points, to 43,470.36. The tech-heavy Nasdaq had shed 0.43%, or 83.22 points, to 19,440.79. The benchmark 10-year Treasury yield had dipped to 4.418%.
Investor Cautiousness and Key Events
Investors are likely adopting a wait-and-see approach on Monday, positioning themselves for several key events this week. Among them is the release of quarterly earnings from semiconductor giant Nvidia after the market closes on Wednesday. This will be Nvidia’s first earnings report since the Chinese DeepSeek artificial intelligence (AI) model sent shockwaves through the market. Nvidia shares were up 2% in premarket trading.
The DeepSeek AI model, which is said to rival US counterparts OpenAI and ChatGPT, has raised questions about the need for US companies to spend billions on AI development. Investors will be keen to hear Nvidia’s perspective on this matter and how it plans to recoup its AI investments.
Aside from corporate news, investors will also be closely watching another inflation report scheduled for release on Friday. The January consumption expenditures index is the Federal Reserve’s preferred gauge of inflation and will provide insights into the central bank’s interest rate policy. Most economists have revised their expectations for rate cuts this year downward, with a growing chorus suggesting that the rate-cutting cycle may have come to an end.
Market Movers
While investors await these major events later this week, they are monitoring some notable movers in the morning session:
- In a sign of easing regulations around cryptocurrencies, Robinhood announced that the Securities and Exchange Commission (SEC) had dropped its investigation into the online trading platform’s cryptocurrency unit without any intention of taking enforcement action.
- However, Bitcoin was trading down 1.2% at $95,144.04, continuing to struggle to break out of a trading range with $100,000 as the upper resistance level.
