U.S. stocks retreated on Tuesday as renewed trade tensions and disappointing economic indicators weighed on investor sentiment. The S&P 500 slipped 0.49% to close at 6,299.19, while the Nasdaq Composite fell 0.65% to 20,916.55. The Dow Jones Industrial Average dipped 61.90 points, or 0.14%, ending the session at 44,111.74.

The pullback came after a turbulent few sessions for Wall Street. On Friday, the Dow dropped over 500 points following a weaker-than-expected jobs report, signaling persistent softness in the labor market. The index rebounded on Monday, gaining nearly 600 points, only to lose ground again Tuesday as concerns about economic momentum resurfaced.

Adding to market jitters was the latest ISM Services reading, which showed little growth in July. Since services account for roughly 70% of the U.S. economy, the stagnant data raised fears of a possible stagflation scenario—slowing growth coupled with inflationary pressures.

Investor anxiety was further fueled by President Donald Trump’s comments hinting at new tariffs targeting semiconductors and pharmaceuticals. “We’re going to be announcing on semiconductors and chips, which is a separate category, because we want them made in the United States,” Trump said in an interview, noting that an official announcement could come within the next week.

On the corporate front, Palantir emerged as a standout, soaring nearly 8% after reporting quarterly revenue above $1 billion for the first time. In contrast, Caterpillar shares ended the day flat following an earnings miss, while Eaton dropped 7% on weak forward guidance.

Despite the recent volatility, some strategists remain optimistic. “Markets are likely entering a phase of consolidation after a strong run,” said Terry Sandven, chief equity strategist at U.S. Bank Asset Management. “Valuations are elevated, but with benign inflation, the prospect of lower interest rates, and rising earnings, the environment still favors a risk-on approach.”

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