On Tuesday, fears of an economic slowdown led the New York Stock Exchange back into a downturn.
While the Dow Jones Industrial Average, which is concentrated with defensive stocks, rose for two straight days, the growth-stock-heavy Standard & Poor’s (S&P) 500 and Nasdaq indices fell for the fourth consecutive trading day since February 20.
Tesla plummeted by 8.4%, and Nvidia, which was set to announce its quarterly earnings the following day, dropped by 2.8%. Other major M7 stocks, the major growth stocks, experienced significant drops, except for Amazon.
The shift in market focus from growth stocks to value and defensive stocks
The shift in market dynamics was confirmed once again on this day. Growth stocks, which had led the market for over two years, faced setbacks as defensive stocks surged, seizing market dominance.
The Dow rose by 159.95 points (0.37%) to close at 43,621.16.
In contrast, the S&P 500 dropped by 28.00 points (0.47%) to 5,955.25, and the Nasdaq fell by 260.54 points (1.35%) to 19,026.39.
At one point, the Nasdaq even fell below the 19,000 mark.
Fears of stagflation
Expectations that U.S. President Donald Trump’s second term would boost the New York Stock Exchange through tax cuts and deregulation have faded.
Investors are beginning to worry about the side effects of Trump’s tariffs and immigration regulations.
The U.S. economy shows signs of rapid contraction just over a month into Trump’s presidency.
Last week, the University of Michigan’s February Consumer Sentiment Index confirmed a decline in consumer confidence, while S&P Global’s Purchasing Managers’ Index (PMI) indicated an economic slowdown. The Conference Board’s February Consumer Confidence Index plummeted the same day.
The February Consumer Confidence Index fell to 98.3, below the baseline of 100. This indicates that pessimistic consumers outnumber optimistic ones, suggesting a contraction in consumer spending, which accounts for about 70% of U.S. economic activity.
Amid concerns that Trump’s tariffs and immigration regulations will drive inflation back up, the economy appears to be contracting, leading to increasing fears of stagflation.
Defensive stocks shine
Defensive stocks, which perform well during economic downturns, showed notable movement today.
Walmart Inc, the largest retailer in the U.S., surged by $4.02 (4.29%) to $97.69, while home improvement retailer Home Depot jumped by $10.87 (2.84%) to $393.29.
Paint manufacturer Sherwin-Williams finished the day by $9.16 (2.66%) at $353.03.
Private health insurers UnitedHealth Group, Procter & Gamble (P&G), McDonald’s, Johnson & Johnson, and the Coca-Cola Company rose by more than 1%.
Tesla sees market cap collapse to $1 trillion
Meanwhile, the leading M7 tech stocks faced setbacks.
Amazon only slightly increased by $0.09 (0.04%) to close at $212.80, while the other six stocks declined.
Apple also experienced a last-minute sell-off, dropping by $0.06 (0.02%) to close at $247.04.
Tesla saw its market cap fall below $1 trillion.
Tesla’s stock plummeted by $27.73 (8.39%) to $302.80 due to poor electric vehicle sales and concerns over CEO Elon Musk’s political activities. At one point, it even fell below $300.
The Tesla brand is now being described as shattered, and its market cap has shrunk to $973.9 billion.
Nvidia, which will announce its quarterly results after the market closes on Wednesday, slid by $3.65 (2.80%) to $126.63, falling below the $130 mark.
Amid uncertainty and anticipation about Nvidia’s earnings report, some analysts suggest that the AI theme centered around Nvidia may be nearing its end, regardless of the earnings results.
Alphabet fell by over 2%, while Microsoft and Meta Platforms dropped by 1.5%.
International oil prices plummet amid economic slowdown fears
International oil prices fell sharply amid concerns about an economic slowdown in the U.S.
Oil prices rebounded after four days due to sanctions on Iran but dropped again the next day.
Brent crude oil, the benchmark for international oil prices, finished down $1.76 (2.35%) at $73.02 per barrel.
West Texas Intermediate (WTI), the U.S. benchmark, also fell below $70 per barrel, dropping by $1.77 (2.50%) to $68.93.
