U.S. equities pared earlier gains on Tuesday, with the Nasdaq 100 Index pulling back from a 1.1 percent advance to gain 0.4 percent by 2:13 p.m. The S&P 500 rose 0.2 percent.
The Conference Board reported its consumer confidence index fell 0.8 points to 89.4 in August—a seven-month low. The index posted its second consecutive monthly decline. Forward-looking expectations for the next six months dropped to their lowest level since January, while the present conditions gauge rose to a four-month high.
Jeffrey Roach, chief economist at LPL Financial, said consumers remain bullish on current conditions but increasingly anxious about future income growth. That gap could weigh on spending and undermine near-term consumption.
Crude oil's decline to $88 per barrel helped lift sentiment Tuesday. The move followed reports that the U.S. was preparing to return diplomats to Middle East embassies, suggesting lower immediate conflict risk around Iran. Treasuries gained alongside the oil decline.
Kathleen Brooks, research director at XTB, said the oil price drop shifted market mood. She also flagged Nvidia's earnings Wednesday evening as a potential catalyst to refresh momentum in AI trades. Nvidia traded higher, on pace to break its longest losing streak since 2022.
Attention now turns to the annual Jackson Hole Symposium on Friday, where Federal Reserve Chair Kevin Warsh will deliver his first major speech since taking office in May 2026. Investors are parsing whether Warsh's prior references to a "regime change" signal a shift in communication style or policy framework.
Ajith Nair, chief investment officer at Isio, said the conference focuses more on the Fed's longer-term monetary direction than immediate policy moves. Nair cautioned that Warsh is unlikely to offer explicit guidance on the next rate decision, meaning "investors hoping for a clear roadmap on rates may find the message somewhat frustrating."
Goldman Sachs recently raised U.S. recession odds to 30 percent, aligning with the consumer sentiment trough. Separately, 61.3 percent of consumers still expect higher interest rates over the next 12 months—down from 62 percent in July. Consumers' 12-month inflation expectations edged higher in August.
Despite weakness in near-term sentiment, consumers still expect higher stock prices a year from now. Both Democrats and Republicans posted sizable declines in confidence, while independents held roughly flat.
Historically, the S&P 500 has delivered strong double-digit returns one year after consumer sentiment troughs, suggesting potential resilience even during current economic headwinds.
