U.S. stock markets closed lower Tuesday, with major indices declining as technology stocks bore the brunt of the sell-off. Investor sentiment weakened ahead of the Federal Reserve’s policy meeting, while concerns about trade policies and inflation weighed on markets.

Tech Sector Leads Losses

Technology stocks dragged the broader market down. Tesla fell 5.3%, continuing a slide that has cut its value in half since December. Nvidia lost 3.4%, contributing to the Nasdaq’s sharp decline. The broader tech sector faced pressure amid concerns over trade tensions and potential tariffs that could disrupt global supply chains.

Market Performance

The S&P 500 dropped 1.1%, losing 60.46 points to close at 5,614.66. The Dow Jones Industrial Average declined 0.6%, shedding 260.32 points to finish at 41,581.31. The Nasdaq Composite tumbled 1.7%, falling 304.55 points to end at 17,504.12.

Investor Sentiment Shifts

A recent survey showed investors cutting their exposure to U.S. stocks at the fastest pace on record, signaling a shift in sentiment. Concerns about economic uncertainty and potential rate cuts contributed to the cautious outlook. Additionally, a report from the New York Federal Reserve pointed to worsening business conditions, with employment levels falling and input prices rising at their fastest pace in nearly two years.

Federal Reserve Meeting in Focus

The Federal Reserve began its two-day policy meeting Tuesday. While the central bank is expected to keep interest rates steady, investors are closely watching for any signals on future rate cuts. Market expectations currently price in about 60 basis points of cuts this year, but uncertainty remains over the pace and timing of policy adjustments.

Global Markets React

U.S. equities’ recent underperformance has led some investors to seek better opportunities in European markets. Trade policy concerns, particularly regarding tariffs, have raised fears of slower economic growth and higher inflation, challenging the narrative of U.S. economic resilience. A potential slowdown in the U.S. economy could have ripple effects across global markets.

Gold Gains as Investors Seek Safety

With stocks under pressure, gold continued to rise, reinforcing its status as a key defensive asset. The SPDR Gold Shares ETF has gained over 5% over the past six days and is up more than 15% year-to-date. Analysts see further upside, with price targets between $3,200 and $3,500 an ounce as investors turn to gold as a hedge against market uncertainty.

Looking Ahead

The combination of trade tensions, shifting investor sentiment, and anticipation of the Federal Reserve’s next move is shaping a volatile market environment. Investors will closely monitor policy statements and economic data in the coming weeks to gauge the market’s direction.