NEW YORK — On Tuesday, Wall Street experienced another dip, with losses primarily driven by major giants of the stock market.
The S&P 500 experienced a decline of 1.1%, continuing a volatile pattern where it previously fell by 10% from its record high and then saw a rebound over two consecutive days. The Dow Jones Industrial Average decreased by 260 points, equating to 0.6%, while the Nasdaq composite dropped by 1.7%.
Tesla was among the significant contributors to the market’s downturn, as its shares fell by 5.3%. Concerns are mounting about potential declines in sales due to CEO Elon Musk’s controversial leadership, especially as he leads initiatives to reduce U.S. government spending. Meanwhile, competition is intensifying as electric vehicle competitors encroach on Tesla’s market share. Recently, China’s BYD introduced an ultra-fast charging system, which it claims can match the speed of traditional gasoline refueling.
Alphabet, Google’s parent company, saw its stock decrease by 2.2% after announcing a $32 billion acquisition of Wiz, a cybersecurity firm. This acquisition marks the company’s most costly purchase throughout its 26-year history and aims to bolster its cloud computing capabilities amidst growing advancements in artificial intelligence.
The decline in major technology stocks extends a recent trend stemming from concerns that these stocks, previously considered unstoppable, were overpriced. This includes companies that saw major gains during the AI technology boom. Notably, Nvidia’s shares decreased by 3.3% as it conducted an event dubbed “AI Woodstock.” Super Micro Computer, known for producing servers, saw a decline of 9.6%, while Palantir Technologies, a provider of AI platforms to clients, dropped by 4%.
These tech firms have faced significant losses as Wall Street adjusts amidst uncertainties surrounding the implications of previous trade policies for the U.S. economy. Policy announcements have prompted concerns that such factors could dampen consumer and business spending, consequently impacting economic growth.
This situation further complicates matters for the Federal Reserve, which is commencing its latest meeting on interest rate policy, with outcomes set to be disclosed on Wednesday.
There is a possibility that the Federal Reserve may reduce its primary interest rate to facilitate borrowing for businesses and consumers in the U.S., potentially stimulating economic activity. However, lower interest rates could exacerbate inflation risks, which is a growing concern for U.S. consumers, particularly with the ongoing impact of tariffs.
Most analysts on Wall Street anticipate that the Federal Reserve will maintain the main interest rate on Wednesday as it awaits additional insights into economic developments. Currently, the job market appears relatively steady, with the economy having closed last year at a solid pace.
Attention will focus on the forecasts the Federal Reserve will publish post-meeting, which will outline expected trajectories for interest rates, inflation, and economic growth in the coming years. Presently, many traders anticipate the Federal Reserve to implement two to three rate cuts by the end of 2025.
One of the reasons behind the recent orderly sell-off in U.S. stock markets, with tech industries primarily affected, is likely the confidence investors have in the Federal Reserve’s ability to stabilize the situation if conditions worsen significantly. This belief in the Federal Reserve’s responsiveness could be challenged this week, contingent on how its actions align with market expectations concerning inflation versus economic weakening, according to analysts.
Overall, the S&P 500 declined by 60.46 points to 5,614.66 on Tuesday. The Dow Jones Industrial Average decreased by 260.32 to 41,581.31, and the Nasdaq composite dropped 304.55 to 17,504.12.
Across international markets, indexes experienced growth throughout Europe and Asia. These regions have outperformed the U.S. stock market this year, reversing a long-standing trend and prompting speculation about the waning of U.S. market dominance.
Japan’s Nikkei 225 advanced by 1.2% as investors anticipate the Bank of Japan will maintain current interest rates at Wednesday’s conclusion of its policy meeting.
Trading on the Indonesian stock exchange saw a temporary halt when the benchmark JSX plunged as much as 6%, though it later narrowed losses to 3.8%.
Investor confidence was shaken by the introduction of a sovereign wealth fund, Danantara, which has not gained substantial popularity. Concerns surrounding tariffs and broader economic threats also weigh on the sentiment, according to a prominent economist from the University of Indonesia.
In the bond market, the yield on the 10-year U.S. Treasury note decreased to 4.28% from 4.31% on Monday night.