U.S. consumer spending came in below analyst expectations, signaling a deceleration in economic activity that hit growth-oriented sectors hard.
The S&P 500 closed down 0.1 percent at 7,499, while the Nasdaq Composite fell 0.6 percent to 25,691. Technology and e-commerce companies bore the brunt of the selloff. Apple dropped 0.6 percent to $325.89. Amazon declined 1.1 percent to $244.85. Meta Platforms fell 2.6 percent to $627.17, the sharpest move among the group, reflecting direct investor concern over ad revenue. Microsoft, with exposure to both enterprise and consumer segments, fell 1.9 percent to $390.34. Tesla, a bellwether for big-ticket discretionary purchases, dropped 1.3 percent to $374.01.
The data undermines a core thesis from analysts at Wedbush Securities, who have consistently cited consumer resilience as a pillar for tech revenue growth. That view now faces a harder test heading into Q3 and Q4 guidance season for consumer-facing companies.
Further weakness in spending could complicate the Federal Reserve's stance on interest rates. Chair Jerome Powell has repeatedly emphasized a data-dependent approach, balancing inflation control with economic stability. A sustained slowdown could increase pressure for rate cuts later this year, though Monday's market reaction centered on the earnings hit rather than any expectation of a dovish pivot.
The Russell 2000, which tracks smaller U.S. companies more exposed to domestic economic cycles, dropped 0.9 percent to 2,960, signaling that concerns extend well beyond large-cap tech. Investors are watching upcoming retail sales figures and corporate guidance for further evidence of where consumer spending—and earnings estimates—go from here.
