"Many companies are expressing caution about the direction of consumer spending at the moment and today's consumer confidence number bears that out."
The mood of the consumer, who props up about 70% of U.S. GDP, has dimmed considerably in February, according to The Conference Board's consumer confidence index, which registered its steepest monthly drop since August 2021. The S&P 500 lost 0.47% to end at 5,955.25, while the Nasdaq Composite slid 1.35% to 19,026.39. The Dow Jones Industrial Average rose 0.37% to 43,620.97.
Treasury yields dropped sharply as investors sought a refuge in bonds from signs of deceleration in the U.S. economy and persistent uncertainty about the effects of tariffs pursued by President Donald Trump. "We are beginning to see some cracks in the markets regarding the economic outlook and anxiety about some of the conflicting policies", said Robert Tipp, head of global bonds at PGIM Fixed Income. Separately, the Treasury Department sold $70 billion in 5-year notes at a high yield of 4.123%. The bid-to-cover ratio was 2.42. Benchmark 10-year notes rose 26/32, yielding 4.2926%. Two-year notes were up 4/32, yielding 4.0962%. 30- year bonds advanced 1-19/32 to yield 4.5510%.
The dollar fell, extending declines after a soft reading on U.S. consumer confidence and a drop in U.S. yields weighed, while optimism for more spending in Germany helped lift the euro. The greenback extended declines after the Conference Board said its consumer confidence index dropped 7 points, its largest fall since August 2021, to 98.3, well short of the 102.5 estimate of economists polled by Reuters. "The present situation index improved, but consumers are expecting dark skies ahead. Change can be scary, so it’s not surprising that confidence is falling," said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin. The dollar index fell 0.33% to 106.25, with the euro up 0.48% at $1.0516. Against the Japanese yen, the dollar weakened 0.51% to 148.95. Sterling strengthened 0.36% to $1.2669.
Oil prices fell 2% on weak economic news from the U.S. and Germany that fed fears of slower energy demand, along with signs from several countries that oil output was on track to increase. Analysts said President Donald Trump's stated plans for higher tariffs have raised inflation worries at the U.S. Federal Reserve. This could lead the Fed to keep interest rates higher, which in turn could slow economic growth and energy demand. Brent futures fell 2.18% to $73.15 a barrel, while U.S. West Texas Intermediate crude futures were down 2.26% at $69.10 per barrel.
Gold prices dropped as investors booked profits after a record high in the previous session on ongoing fears of instability around U.S. President Donald Trump's tariff plans."You are seeing profit-taking as well as people looking to get to the sidelines and to re- establish positions at a lower price," said Bob Haberkorn, senior market strategist at RJO Futures. Safe-haven gold has hit eleven record highs this year so far, surpassing the significant $2,950/oz milestone. Spot gold fell 1.28% to $2,913.39 an ounce. U.S. gold futures were 1.28% lower at $2,925.20 an ounce.
