U.S. stock indices experienced a downturn on Tuesday, reflecting growing concerns over the health of the U.S. economy. The S&P 500 dropped by 0.5%, the Dow Jones Industrial Average fell by 61 points (0.1%), and the Nasdaq composite declined by 0.7%. This movement followed a volatile period where the S&P 500 swung from its worst day since May to its best day in the same month. A weaker-than-expected report on U.S. services sector activity, encompassing industries like transportation and retail, exacerbated worries that President Donald Trump’s tariffs might be negatively impacting the economy. However, optimism surrounding potential Federal Reserve interest rate cuts and stronger-than-anticipated corporate earnings helped mitigate the losses. The S&P 500 remains within 1.4% of its record high. Edgewell Personal Care, the parent company of Schick, Playtex, and Banana Boat, saw its shares plummet by 18.8% after reporting lower-than-expected quarterly profits and revenue. CEO Rod Little attributed the decline to a weak sun care season in North America and tariff-related profit pressures. Across industries, companies have been vocal about the adverse effects of tariffs on their earnings, with trade policy emerging as a dominant theme in the latest Institute for Supply Management survey. Despite these challenges, the artificial intelligence sector continues to thrive. Palantir Technologies surged 7.8% after exceeding profit expectations and raising its full-year revenue forecast. Similarly, Axon Enterprise, known for its Tasers and body cameras, leaped 16.4% due to robust AI-driven growth. On the downside, American Eagle Outfitters fell 9.5%, partially reversing its previous day’s gains, while Yum Brands dropped 5.1% after missing earnings expectations. The S&P 500 closed at 6,299.19, the Dow at 44,111.74, and the Nasdaq at 20,916.55. Market analysts are now closely watching corporate earnings and potential Federal Reserve rate cuts in September, which could provide a boost to both stock prices and the broader economy. Treasury yields also declined, with the 10-year yield dropping to 4.19%, reflecting investor caution. Internationally, stock markets in Europe and Asia mostly rose, while India’s Sensex dipped 0.4% amid U.S.-India trade tensions.