Stock markets opened slightly lower on Tuesday as investors remained cautious amid signs of an economic slowdown. The ongoing sell-off, fueled by fears of weaker demand and corporate earnings, continued to weigh on investor sentiment.
The S&P 500 dropped by 0.3%, bringing its year-to-date losses to approximately 5%, effectively wiping out all post-election gains since Donald Trump’s victory in November. Meanwhile, the Dow Jones Industrial Average fell by 150 points (0.4%), and the Nasdaq Composite dipped 0.2% as tech stocks remained under pressure.
Airline Stocks Struggle as Demand Weakens
A fresh warning about slowing economic growth came from the airline industry, with three major U.S. carriers reporting signs of declining demand. This follows a tragic mid-air collision between an American Airlines flight and a military helicopter over the Potomac River earlier this year, which has compounded concerns in the travel sector.
- American Airlines stated in a regulatory filing that its revenue projections had weakened, citing the impact of Flight 5342’s crash and lower domestic leisure travel demand, especially in March.
- Delta Air Lines noted that macroeconomic uncertainty was eroding both consumer and corporate confidence, leading to a dip in domestic ticket sales.
- Southwest Airlines revised its earnings forecast downward for the remainder of the year, adding to growing worries about travel-related stocks.
Wall Street Analysts Turn Cautious on U.S. Stocks
Investor sentiment has shifted in recent days, with Wall Street analysts downgrading their outlook for U.S. equities. On Monday, Citigroup lowered its rating on U.S. stocks from “overweight” to “neutral”, pointing to softening job growth and fading momentum in artificial intelligence investments. This followed a similar downgrade by HSBC just a day earlier.
Adding to the pessimism, Barclays issued a fresh warning on Tuesday, noting that “the U.S. economy is clearly softening despite an OK jobs report.” The bank also cautioned that investors shouldn’t rely on a "Trump Put"—a reference to the expectation that the former president might take steps to stabilize markets as he did during his first term.
Small Business Optimism Declines Amid Rising Uncertainty
Economic concerns were further underscored by The National Federation of Independent Business (NFIB), which reported a decline in small business optimism for February. Although the index remains above its long-term average, business owners are becoming increasingly wary about the future.
“Uncertainty is high and rising on Main Street,” said NFIB Chief Economist Bill Dunkelberg. “Optimism about future business conditions has dropped, and fewer small business owners believe this is a good time to expand. Inflation remains a pressing issue, second only to ongoing labor quality challenges.”
Investors Await Inflation Data & Trump’s Economic Strategy
Market participants are closely watching developments in Washington, where Donald Trump is set to meet with the Business Roundtable on Tuesday to discuss economic policies with top corporate executives. Investors are eager to see whether he provides new guidance on tariffs, economic stimulus, or corporate regulations.
Meanwhile, Wednesday’s Consumer Price Index (CPI) report from the Bureau of Labor Statistics could be a key market-moving event. Inflation is expected to have cooled slightly in February compared to January, but any surprises in the data could lead to heightened volatility in stocks.
With uncertainty rising and economic signals flashing mixed warnings, investors remain on edge, watching for the next catalyst that could shape market direction.