Morning Bid: Confidence-sapped stocks find foothold as Nvidia awaited

A look at the day ahead in U.S. and global markets from Mike Dolan

Hit by draining consumer and business confidence amid uncertainty about Washington's economic policies, Wall Street stock indexes are all tripping into the red for 2025 - with the slide stalling for now, awaiting megacap Nvidia's earnings today.

The latest sideswipe from main street has unnerved stock, bond and credit markets across the piece.

U.S. consumer confidence deteriorated at its sharpest pace in 3-1/2 years in February, with 12-month inflation expectations surging amid worries that tariffs on imports would raise prices for households.

At 8-month lows, it was the third straight monthly decrease in that measure of household sentiment and pushed the index to the bottom of the range that has prevailed since 2022.

But it's just the latest in a series of similar outcomes from consumer, business and housing surveys showing rising levels of anxiety about the blizzard of sometimes conflicting new policy signals from Donald Trump's latest administration.

The gnawing fear is that high levels of uncertainty are making it impossible for firms to plan and invest, dragging on economic activity and hiring, sapping stock prices and further hitting confidence in a risky spiral.

Gauges of U.S. economic uncertainty are now at their highest since the pandemic lockdowns five years ago and global equivalents are at their highest on record, according to the Economic Policy Uncertainty index series.

And U.S. financial markets, which had mostly assumed the Trump presidency would do the opposite for economic confidence, now appear wrongfooted and are rotating portfolios frantically.

On Tuesday, the S&P 500 fell again to its lowest close of the year. The pullback in the big tech was even bigger, led by a pre-earnings 3% slide in Nvidia and a whopping 8% retreat in Elon Musk's auto giant Tesla.

Tesla's market value tumbled below $1 trillion for the first time since November after news of a sales slump in Europe last month amid a series of boycott campaigns due to Musk's political roles. The European Automobile Manufacturers Association reported that Tesla sales dropped 45% in Europe, compared with a 37% jump in overall sales of EVs in Europe.

That's seen the once "Magnificent Seven" of Big Tech mega caps slide deep into the red for 2025, marking an official 'correction' of more than 10% from the record peaks of December.

The wider Nasdaq and small cap Russell 2000 are now down more than 2% for the year so far - a stark contrast to 14-15% gains in Germany's DAX or Hong Kong's Hang Seng.