Wall Street’s recent relief rally came to an abrupt halt on Tuesday as investors turned cautious ahead of the Federal Reserve’s policy decision and escalating geopolitical tensions. After two straight days of gains, all three major indexes closed lower.
Market Snapshot:
- Dow Jones Industrial Average (^DJI): -0.5% (-223 pts)
- S&P 500 (^GSPC): -1% (nearing correction territory, 8.6% below record highs)
- Nasdaq Composite (^IXIC): -1.7% (deep in correction territory)
After last week’s sharp selloff pushed the S&P 500 into correction territory, Wall Street had been hoping for stabilization. But worries about President Trump’s trade war with major partners and the Fed’s next move kept traders on edge.
Key Factors Driving the Drop:
Federal Reserve Policy Meeting
- The Fed’s two-day meeting began Tuesday, with markets overwhelmingly expecting policymakers to hold rates steady. Traders are watching for clues about future moves, especially with Trump’s tariffs raising concerns over slowing economic growth and potential stagflation.
- Fed Chair Jerome Powell is set to deliver a press conference Wednesday. Futures indicate a 99% probability of no rate changes.
Geopolitical Tensions Heating Up
- Gold prices (GC=F) hit a record high, surging above $3,040/oz as investors sought safety after Israeli airstrikes in Gaza heightened Middle East tensions.
- Crude oil prices rose over 1% on fears of supply disruptions.
- President Trump’s negotiations with President Putin for a potential Russia-Ukraine truce and Germany’s historic vote on boosting government spending added to the geopolitical noise.
Tesla Tumbles Again
- Tesla (TSLA) extended its recent losses, dropping 5% after RBC Capital Markets slashed its price target, citing intensifying EV competition.
- The EV giant has plunged 36% over the past month, one of the hardest-hit names in the tech correction.
Nvidia’s GTC Conference in Focus
- The market has its eye on Nvidia (NVDA) as CEO Jensen Huang delivers his keynote at the company’s annual GTC conference.
- Investors are awaiting details on the Blackwell Ultra AI chip, next-gen Rubin GPU platform, and the Vera CPU.
- Nvidia’s announcements could serve as a bellwether for AI sentiment and broader tech trends.
US Housing Starts Beat Expectations
- On the macro front, US housing starts rose 11.2% in February, beating Bloomberg estimates. The seasonally adjusted annual rate of 1.501 million units suggests resilience in housing despite rate worries.
Investor Sentiment Still Fragile
- Allianz advisor Mohamed El-Erian noted that this correction ranks as the fifth fastest since WWII.
- “Will the growth scare be contained? Will the Fed put work?” El-Erian asked, as Wall Street debates whether a true bottom has been reached.
The market remains under pressure with Trump’s trade war, Fed policy, and geopolitical risks front and centre. AI optimism around Nvidia could offer relief, but uncertainty is still the name of the game.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
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