Stock market today: S&P 500 closer lower on fresh economic concerns

Investing.com -- The S&P 500 closed lower Tuesday after data showing services activity unexpectedly contracted stoked concerns about the underlying of the economy just as the quarterly earnings season continues.

At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average fell about 62, or 0.1%, the S&P 500 index fell 0.4%, and the NASDAQ Composite fell 0.7%.

US services activity unexpectedly drops in July

The Institute for Supply Management’s non-manufacturing purchasing managers’ index  unexpectedly fell to a reading of 50.1 from in July from 50.8 in the prior month, confounding expectations for a reading of 51.5. 

A level above 50 indicates expansion, although the ISM associates a PMI mark above 49 over time with overall economic growth. Services represent a critical portion of the U.S. economy, accounting for more than two-thirds of activity.

"Anecdotal comments suggest that tariffs were still a big factor limiting orders, investment and activity," Jefferies said in a recent report. 

The weak reading on services, which makes up about 80% of economic growth, triggered worries about the economy at time when many expect that the Federal Reserve will resume rate cuts in September. 

Expectations for rate cuts were boosted recently following last week’s soft payrolls report and recent remarks from San Francisco President Mary Daly who signaled that she may be ready to back a rate cut at the September meeting.

Elsewhere, the U.S. trade deficit narrowed in June by more than anticipated in June, reflecting a dip in imports at the end of the second quarter following a tariff-fueled rise in incoming goods earlier in the year.

Data from the U.S. Census Bureau and Bureau of Economic Analysis showed that the trade gap slipped by 16% to $60.2 billion during the month, down from $71.7 billion in May. Economists had anticipated a reading of $62.6 billion.

Palantir impresses as earnings season continues

A relatively solid second-quarter reporting period -- along with sanguine tariff commentary from some company executives -- has also bolstered Wall Street.

Palantir Technologies (NASDAQ:PLTR) shares jumped after the data analytics and defense software group posted its biggest quarterly revenue total since it went public five years ago, fueled by strong demand from governments and corporations for its artificial intelligence-enhanced services.

The White House’s drive to encourage the widespread adoption of AI -- as well as the Pentagon’s move to buy more software from "non-traditional" providers -- has also powered returns at the data analytics and defense software group.

Pfizer (NYSE:PFE) stock gained after the drugs giant posted second-quarter earnings and revenue that exceeded analyst estimates and raised its full-year profit outlook.

Marriott International (NASDAQ:MAR) stock was flat after the hotel operator beat expectations for second-quarter earnings, even as it narrowed its full-year earnings outlook, flagging ongoing headwinds from federal government spending cuts and weaker business travel.

Caterpillar (NYSE:CAT)’s stock was slightly higher after the heavy equipment manufacturer reported second-quarter 2025 adjusted earnings that fell short of analyst expectations, despite posting better-than-expected revenue.

Peter Nurse, Ayushman Ojha contributed to this article