Feb 25 (Reuters) - Wall Street's main indexes fell to touch a more than one-month low on Tuesday after fresh economic data indicated consumer mood was deteriorating and investors braced for a possible fallout from tighter U.S. trade controls on Beijing.
The Conference Board said consumer confidence deteriorated in February at its fastest pace in three-and-a-half years, with estimates for 12-month domestic inflation surging amid worries that U.S. tariffs on imports would raise prices for households.
Investors flocked to Treasury bonds, sending the yield on the two-year note to its lowest since November, helping real estate stocks (.SPLRCR), rise 1.4%.
Sectors which are expected to fare better despite economic uncertainty gained, with consumer staples (.SPLRCS), rising 1.9% and healthcare (.SPXHC), adding 0.3%.
"There has been a lot of talk about tariffs, but until we really know what (the) policy will end up being, the uncertainty is making it difficult for the bulls to really get any kind of control of this market," said Chris Zaccarelli, chief investment officer at Northlight Asset Management.
Tuesday's consumer confidence report reinforced worries that the domestic economy is stalling and the U.S. Federal Reserve is likely to be cautious about cutting interest rates.
U.S. Treasury Secretary Scott Bessent said the economy is more fragile under the surface than economic metrics suggest.
Interest-rate futures currently point to the central bank staying put on borrowing costs for the first half of the year, according to data compiled by LSEG.
Policymaker Thomas Barkin and Fed Vice Chair for Supervision Michael Barr are expected to speak through the day.
At 11:50 a.m. the Dow Jones Industrial Average (.DJI), fell 5.45 points, or 0.01%, to 43,455.76, the S&P 500 (.SPX), lost 47.97 points, or 0.80%, to 5,935.28, and the Nasdaq Composite (.IXIC), lost 304.07 points, or 1.58%, to 18,983.51.
A gauge tracking investor fear (.VIX), spiked to hit its highest in nearly a month and was last up 1.57 points at 20.51.
Seven of the S&P 500's 11 sectors traded lower, with communication services (.SPLRCL), leading declines with a 1.8% drop.
Investors also focused on a report that said the U.S. was planning further restrictions on Nvidia's chip exports to China and that Washington was consulting with allies about tightening chip curbs on Beijing.
Nvidia (NVDA.O), dropped 2.9% and an index tracking semiconductor stocks (.SOX), fell 1.9%.
Nvidia's results on Wednesday will be crucial for technology companies, as investors have questioned the industry's hefty artificial-intelligence spends, especially after low-cost competition from China's DeepSeek rattled markets in January.
The S&P 500 technology sector (.SPLRCT), is on track for its first quarterly decline since July 2023, if losses hold.
Crypto stocks fell, with Coinbase (COIN.O), down 8.3% and MicroStrategy (MSTR.O), down 11% tracking bitcoin prices, which touched their lowest since November.
Eli Lilly (LLY.N), rose 2.1% after the drugmaker said it has begun selling higher doses of its weight-loss drug Zepbound in vials in the U.S., at a discount to the injector-pen versions.
Solventum (SOLV.N), jumped 9.8% after drug manufacturer Thermo Fisher (TMO.N), said it will buy the company's purification and filtration business for about $4.1 billion.
Declining issues outnumbered advancers by a 1.07-to-1 ratio on the NYSE, and by a 2.07-to-1 ratio on the Nasdaq.
The S&P 500 posted 26 new 52-week highs and seven new lows, while the Nasdaq Composite recorded 31 new highs and 255 new lows.
Reporting by Johann M Cherian in Bengaluru; Editing by Devika Syamnath and Pooja Desai
