05:03 PM EDT, 10/07/2025 (MT Newswires) -- US equity indexes fell on Tuesday as investors reduced exposure to consumer discretionary and communication services amid rising inflation expectations, continuing government shutdown, and a surge in gold prices to fresh all-time highs.

The S&P 500 declined 0.4% to 6,714.59, the first drop in eight days. The Nasdaq Composite slid 0.7% to 22,788.36, and the Dow Jones Industrial Average moved 0.2% lower to 46,602.98.

Consumer discretionary, technology, and communication services were among the steepest decliners, taking a breather from the so-called AI trade.

Among large-cap companies with a market capitalization of $200 billion or more, Tesla (TSLA) and Oracle (ORCL) were among the worst-performing.

Tesla dropped 4.3% after unveiling on Tuesday standard versions of Model 3 and Model Y with list prices under $40,000 each, according to the company's website. Meanwhile, Oracle is seeing thin profit margins in its fast-growing artificial intelligence cloud server business, according to internal documents cited by The Information on Monday. Shares of the tech giant dropped 2.5%.

Gold futures rose 0.7% to $4,003.60, after scaling yet another peak of $4,014.60 earlier in the session.

Gold's rally is the collective 'hedge' against the prospective failure of the US's AI-driven tech boom to deliver on its high-productivity, high-growth promises, or to justify the vast investment needed to support those promises, Thierry Wizman, global foreign-exchange and rates strategist at Macquarie Group, said in a note.

"A collapse of that optimistic 'vision' might trigger an inflationary resolution for the world's sovereign debt overhang, rather than a productivity-based resolution," he added.

In economic news, consumer expectations for one-year US inflation growth increased to 3.4% in September from 3.2% in the previous month, according to a survey released by the New York Federal Reserve Bank on Tuesday.

The September level is the highest in five months, according to data compiled by Trading Economics. Median inflation expectations remained at 3% for the three years ahead but increased to 3% from 2.9% for five years out.

The first look at consumer confidence for October showed the RealClearMarkets' monthly index falling to 48.3 in October from 48.7 in September. The print is the lowest since May and below market expectations of 49.3, according to a report from Trading Economics. This marks the second consecutive month the index has remained below the neutral 50 mark, signaling ongoing consumer pessimism.

Meanwhile, President Donald Trump on Tuesday called the Democrats' shutdown strategy a "kamikaze attack" that has handed his administration the opportunity to cut "billions and billions in waste, fraud and abuse," ABC News reported. The Senate is expected to vote again on Democratic and Republican proposals to fund the government and end the shutdown, now in its seventh day.

Most Treasury yields fell, with the two-year down 2.5 basis points to 3.57% and the 10-year rate slumped 3.3 basis points to 4.13%.