Stocks Get Hit as Economic Jitters Spur Bond Rally: Markets Wrap

by


(Bloomberg) — Stocks got hit and bonds surged as another disappointing reading on the US consumer fueled concern about the health of the world’s largest economy.

Most Read from Bloomberg

Another big drop in the Nasdaq 100 pushed its four-day loss to around 5%, the most since early September, while a gauge of megacaps slipped into correction territory. Selling was heaviest in speculative corners of the market, with a 7.5% slide in Bitcoin spurring a plunge in exchange-traded funds specializing in crypto. A rally in Treasuries drove 10-year yields to their lowest levels in 2025.

US consumer confidence fell the most since August 2021 on concerns about the outlook for the broader economy. The data followed recent disappointments on the retail, services and housing fronts. That’s prompted traders to boost their bets on Federal Reserve rate cuts this year even as inflation pressures seem to be intensifying.

“The market still seems more worried about growth than inflation,” said Chris Verrone at Strategas.

The S&P 500 lost 0.4%. The Nasdaq 100 slid 0.9%. The Dow Jones Industrial Average rose 0.3%. A gauge of the “Magnificent Seven” megacaps sank 2%. On the eve of Nvidia Corp.’s results, the shares lost as much as 4.5%, before paring losses. Apple Inc. rose.

The yield on 10-year Treasuries sank nine basis points to 4.31%. Money markets are now fully pricing in more than two quarter-point reductions by the Fed in 2025. The dollar lost 0.1%.

Wall Street Gamblers Get Crushed as Leveraged ETF Losses Hit 40%

“Consumers are increasingly nervous about the unknown impacts from potential tariffs and could pull forward consumer demand as they anticipate higher prices for imports in the near future,” said Jeff Roach at LPL Financial.

One note of caution, Roach says, consumer surveys are much more volatile than the hard data of retail sales. That means the Fed will not likely change their stance on monetary policy at the next couple meetings, according to the economist.

Inflation expectations over the coming year increased to the highest since May 2023. Fed officials including Chair Jerome Powell have signaled they’re keeping interest rates steady until progress on inflation resumes.

“Consumer confidence continues to come off its election-fueled sugar high from November,” said Bret Kenwell at eToro. “Economic uncertainty remains elevated, whether that’s around tariffs or more US-centric data like inflation or retail sales.”


Leave a Comment