The Dow Jones Industrial Average dropped 389.83 points, or 0.95%, to close at 40,829.00 on Tuesday. The S&P 500 shed 0.77% to settle at 5,606.91, and the Nasdaq Composite dipped 0.87%, ending at 17,689.66. All three major averages posted back-to-back declines.
Stocks slipped after President Donald Trump’s commentary on global trade deals unsettled the markets, disappointing investors who had hoped progress would soon be made on the tariff front. Investors are also waiting for the Federal Reserve’s policy decision. Tesla shares dropped 1.8% after the company reported its new car sales in Britain and Germany had fallen to their lowest in more than two years in April, despite growing demand for electric vehicles.
Apple and Microsoft were among the tech giants that saw declines. Contradictory statements on trade deals from Trump and Treasury Secretary Scott Bessent added to the market’s uncertainty. Bessent had earlier suggested that trade agreements could be finalized soon, while Trump made comments suggesting otherwise.
The Federal Reserve began its two-day policy meeting on Tuesday, with a decision scheduled for Wednesday.
Markets fall on trade deal fears
The central bank is expected to keep rates steady, with just a 3.1% chance of easing.
Traders are keenly waiting for Fed Chair Jerome Powell’s comments on the economic outlook. “Despite external pressure to lower rates, the Fed will likely hold strong on the current pause until we see greater clarity on the major economic factors impacting the economy,” said Steve Rick, chief economist at TruStage. JPMorgan downgraded shares of fast-casual salad chain Sweetgreen to a neutral rating from overweight, citing a waning macroeconomic background and excess restaurant supply.
Shares of Sweetgreen have declined 39% this year. Henry Allen, a macro strategist at Deutsche Bank, noted that current market trends are reminiscent of last summer, when data deteriorated sharply and markets were briefly in turmoil. Allen believes that tighter financial conditions due to tariffs are likely to be avoided.
The pace of merger and acquisition activity has slowed significantly, according to data compiled by Dealogic. The number of deals signed globally fell in April to the lowest level since February 2005, and the U.S. saw its lowest level of M&A activity since May 2009. U.S. onshore oil production has likely peaked and will start to decline due to the recent plunge in crude prices, according to Diamondback CEO Travis Stice.
U.S. crude oil prices rose more than 3% on Tuesday to $59.26 per barrel, recovering from their lowest level in four years.
