US stocks closed lower on Tuesday as investors digested a wave of policy proposals from President Donald Trump and reassessed earnings from major financial institutions. Despite encouraging inflation data, uncertainty around potential regulatory changes and geopolitical tensions contributed to market volatility.
Major Indexes End in the Red
The S&P 500 slipped 0.19 percent to close at 6,963.74, while the Dow Jones Industrial Average fell 398 points, or 0.8 percent, ending at 49,191.99. The Nasdaq Composite declined 0.1 percent to 23,709.87. The pullback followed a record setting session a day earlier when major indexes reached all time highs.
Financial Stocks Under Pressure
Shares of JPMorgan fell more than 4 percent despite the bank posting better than expected fourth quarter results. While trading revenue rose, investment banking fees missed forecasts, raising concerns among investors. Other financial stocks also declined, with Goldman Sachs, Mastercard, and Visa among the weakest performers, dragging down banking and financial sector exchange traded funds.
Policy Proposals Fuel Market Uncertainty
Investor sentiment was further affected by a series of proposals from President Trump, including a call to cap credit card interest rates at 10 percent for one year and restrictions on dividends and share buybacks by defense companies. Questions remain over whether such measures can be implemented without congressional approval, adding to uncertainty around the policy outlook.
Inflation Data and Fed Expectations
Earlier in the session, stocks briefly found support after inflation data showed moderation in price pressures. Core consumer inflation rose 0.2 percent in December and 2.6 percent year over year, below expectations. Headline inflation matched forecasts at 2.7 percent annually. Combined with recent labor market data, the figures suggest the Federal Reserve may delay interest rate cuts, with markets pricing in two reductions later this year.
Oil Prices and Geopolitical Risks
Oil prices moved higher after renewed tensions involving Iran and the threat of additional tariffs on countries doing business with Tehran. Rising energy prices added another layer of risk for markets already navigating policy uncertainty and global instability.
Conclusion
Tuesday’s market decline reflected growing caution among investors as policy uncertainty, sector specific pressures, and geopolitical risks offset positive economic data. With markets near record levels, analysts expect volatility to persist as investors seek clarity on regulatory direction and central bank policy.
