(Bloomberg) — A rebound in stocks faded on speculation the market has run too far, too fast amid risks stemming from a trade war to an economic slowdown and sticky inflation.
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Following one of its best days in 2025, the S&P 500 fluctuated. Wall Street investors refrained from making big bets on Tuesday, with a slide in consumer confidence to a four-year low weighing on sentiment. That’s even as traders added to bets on Federal Reserve rate cuts in 2025. Bond yields slipped. The dollar halted a four-day advance. Oil fell as US said Russia and Ukraine have agreed to a ceasefire in the Black Sea. US copper surged to a record.
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Market forecasters have been split on whether the rebound in equities has further to go. Strategists at HSBC Holdings Plc led by Max Kettner downgraded their rating on US stocks to underweight, citing economic concerns. Meantime, JPMorgan Chase & Co.’s Ilan Benhamou said it’s time to pause the rally-fading approach as emerging clarity on tariffs alleviates some key risks.
To Matt Maley at Miller Tabak, the stock market’s bounce from a selloff has been a good one, but it investors need to be convinced that the worst is really behind us.
“In other words, this bounce is nothing more than something you would normally see after a correction,” he noted.
The S&P 500 was little changed. The Nasdaq 100 rose 0.2%. The Dow Jones Industrial Average wavered. Most megacaps advanced, though Tesla Inc. and Nvidia Corp. halted their rallies. KB Home sank after cutting its sales forecast.
The yield on 10-year Treasuries slid three basis points to 4.30%. The dollar dropped 0.2%.
Consumer sentiment surveys from The Conference Board and University of Michigan have been dismal of late as households fear a resurgence in inflation from President Donald Trump’s tariffs. Companies have warned of higher prices and less demand, coinciding with economists’ forecasts that suggest a risk of stagflation and rising odds of recession.
“Sentiment continues to wane among investors, consumers and businesses as economic concerns and economic policy uncertainty takes its toll,” said Bret Kenwell at eToro. “Until there’s more certainty on the tariff and macro front, sentiment and confidence remain vulnerable.”