US stocks inched lower on Tuesday, extending the selloff from the previous session that had pushed major indices to multi-month lows, as concerns over aggressive government spending cuts and uncertain trade policy weighed heavily on investor sentiment.
US stocks extend plunge
The S&P 500 and the Nasdaq 100 remained near six-month lows, with the latter suffering its worst session since 2022, while the Dow Jones dropped another 100 points. The persistent weakness in equities came as key members of the Presidential administration acknowledged that their proposed economic reforms could significantly slow growth in the near term. President Trump openly conceded the possibility of a recession, while Treasury Secretary Bessent warned that economic contraction was a real risk as spending cuts and trade policies take effect.
Tech leads the decline
The risk-off sentiment in markets was further exacerbated by a sharp pullback in high-flying technology stocks, as investors unwound speculative bets on AI-driven gains. Nvidia, Apple, Alphabet, and Meta have each lost close to 5% since the start of the week, reflecting a broader shift away from the once high-growth sector amid increasing concerns over valuation and economic headwinds. Tesla suffered an even steeper decline, plunging over 14%, as investor confidence eroded following a report highlighting slowing deliveries and rising competition from Chinese EV makers.
Beyond tech, weakness was also evident in the airline sector, with Delta Airlines sinking 4% after slashing its earnings outlook due to softening travel demand. The airline cited weaker-than-expected consumer spending and geopolitical uncertainties as key factors weighing on ticket sales, further fueling concerns that broader economic conditions were deteriorating.
Bond markets reflects growing investor caution
Meanwhile, bond markets reflected growing investor caution, with the yield on the 10-year US Treasury note falling further as traders sought safe-haven assets amid heightened economic uncertainty. Looking ahead, all eyes will be on upcoming economic data releases, including key inflation readings and retail sales figures, which could provide further clarity on the trajectory of the US economy. With volatility on the rise and investor sentiment turning increasingly bearish, markets remain vulnerable to further downside risks in the coming weeks.
