Traders work on the floor of the American Stock Exchange at the New York Stock Exchange in New York on Wednesday, April 23, 2025. Photo by Michael Nagle for Bloomberg.
U.S. stock markets took another dip on Tuesday as investors grew uneasy over the continuing impact of President Trump’s trade policies and the slowing excitement around artificial intelligence-related stocks.
The S&P 500 slid 0.5% by the afternoon, marking a second consecutive day of losses after a rare nine-day winning streak. The Dow Jones Industrial Average fell 198 points, or 0.5%, and the tech-heavy Nasdaq was down by 0.6%.
AI Stocks Losing Spark
Palantir Technologies, a company known for its AI software, fell sharply by 14%—one of the steepest declines among major stocks. This drop came despite the company posting profits that met expectations and increasing its revenue outlook for the year. The high valuation of Palantir, whose stock had soared from $20 to nearly $110 over the past year, may have caused investor hesitation.
Another major player in the AI space, Nvidia, also saw a modest drop of 0.7%. The company has become a symbol of the AI boom, but even it wasn’t immune to the broader market dip.
Tariffs Shake Corporate Confidence
Beyond AI, the main issue rattling the markets is uncertainty surrounding U.S. tariffs. Several companies are now openly expressing concern about how these trade policies will impact their profits and planning.
Clorox CEO Linda Rendle noted shifts in customer behavior over the last quarter, resulting in revenue and profit that both fell short of expectations. The company doesn’t expect a rebound soon and its stock dropped 2.2%.
Toymaker Mattel is also showing caution. The company announced it would pause financial projections for 2025 due to uncertainties around tariffs and consumer spending, particularly with the holiday season approaching. Despite this, Mattel shares were up 4% after reporting better-than-expected results for the last quarter.
Ford Motor Company delivered even more sobering news. The automaker said it expects to lose $1.5 billion this year due to tariffs and will no longer provide full-year forecasts, citing “tariff-related uncertainty.”
These companies now join a growing list of businesses choosing to withdraw or revise their earnings forecasts as they grapple with the unpredictable nature of current trade negotiations. There’s hope that Trump might ease the tariffs after reaching deals with trade partners, but the lack of clarity is already weighing on business decisions.
Impact on Households and Spending
This economic uncertainty isn’t just affecting businesses—it’s making households more cautious too. With shoppers holding back on major purchases, consumer-facing companies are beginning to feel the effects.
DoorDash, for example, saw its stock fall 7.5% after posting weaker-than-expected revenue. However, the company also noted that its U.S. marketplace orders have remained strong and steady compared to the previous year, hinting that consumer demand isn’t completely vanishing.
Bonds and Interest Rate Talks
Meanwhile, Treasury yields dipped slightly. The yield on the 10-year Treasury fell to 4.35% from 4.36% the day before. Investors are closely watching the Federal Reserve, which has begun a two-day meeting. While it’s unlikely the Fed will adjust interest rates this week, the broader market is still guessing whether rate cuts could happen later this year.
Michele Raneri of TransUnion summed up the uncertainty: “The economic picture is still unclear. While rate cuts are possible later this year, it’s too early to say when or if they’ll happen.”
Rate cuts could help boost the economy, but they also carry the risk of increasing inflation—a concern already tied to rising tariffs.
Mixed Signals from Global Markets
Globally, markets painted a mixed picture. In Asia, the Shanghai index rose 1.1% and Hong Kong's index gained 0.7%, offering a bit of relief in an otherwise tense investment landscape.
