Stocks fell sharply on Tuesday as Wall Street’s recent rebound lost steam, with major indices sliding amid renewed investor concerns over Federal Reserve policy and looming tariff decisions from the Trump administration. The Dow Jones Industrial Average shed more than 250 points, while the S&P 500 and Nasdaq Composite posted even steeper losses, weighed down by a sell-off in technology stocks. Tesla led the declines, dropping over 5% after an analyst downgrade, while Nvidia and Palantir also struggled, pulling the broader market lower. Investors remained cautious ahead of Wednesday’s Federal Reserve interest rate decision, while geopolitical tensions and fluctuating commodity prices added to the uncertainty.

Key Takeaways:

  • Dow Drops More Than 250 Points as Market Sell-Off Resumes: The Dow Jones Industrial Average tumbled 260.32 points, or 0.62%, to close at 41,581.31, reversing gains from the previous two sessions. The renewed market decline reflected ongoing uncertainty around Federal Reserve policy and potential new tariffs from the Trump administration. 
  • S&P 500 Nears Correction Territory: The S&P 500 shed 1.07% on Tuesday, finishing at 5,614.66 as the index approaches correction territory. The broad-based index has struggled in recent weeks, pressured by a mix of economic uncertainty and shifts in investor sentiment. 
  • Nasdaq Sinks 1.71% as Tech Sector Takes Heavy Losses: The Nasdaq Composite saw the steepest decline among major US indices, dropping 1.71% to settle at 17,504.12. The tech-heavy index remains in a correction, having fallen more than 10% from its recent peak. High-growth technology stocks led the downturn, with Tesla plunging more than 5% and Nvidia and Palantir falling nearly 3% and 4%, respectively. 
  • Europe Stocks Close Higher as Germany Passes Landmark Fiscal Package: European markets ended Tuesday on a positive note, lifted by optimism surrounding Germany’s approval of a historic fiscal reform package. The DAX Index gained 226 points, or 0.98%, while the FTSE 100 added 24.94 points, or 0.29%, to close at 8,705.23. France’s CAC 40 rose 41 points, or 0.50%, and Italy’s FTSE MIB surged 511 points, or 1.31%. The German Bundestag passed a major spending bill that unlocks €500 billion ($548 billion) for infrastructure and defence.
  • Asia-Pacific Markets Rally as Hong Kong Tech Stocks Soar: Asian stocks posted broad gains on Tuesday, with Hong Kong’s Hang Seng Index jumping 2.29% in its final trading hour. Baidu led the rally, soaring 12.11% on strong investor demand. Meanwhile, China’s CSI 300 edged up 0.27% to 4,007.72, while Japan’s Nikkei 225 climbed 1.20% to 37,845.42. South Korea’s Kospi ended the day flat at 2,612.34, while Australia’s S&P/ASX 200 also closed unchanged at 7,860.40.
  • US Treasury Yields Remain Mixed Amid Cautious Trading: The 10-year Treasury yield slipped slightly to 4.285% after the latest retail sales report, reflecting some investor caution ahead of the Federal Reserve’s policy decision. Meanwhile, the 2-year Treasury yield edged up to 4.042%. Housing data added further complexity to the bond market outlook, with new housing starts rising to a seasonally adjusted annual rate of 1.5 million in February, an 11.2% increase from January. Building permits totalled 1.46 million, slightly above expectations but 1.2% below the prior month.
  • Oil Prices Ease as Ukraine Talks Offset Middle East Supply Concerns: Crude oil prices declined on Tuesday as geopolitical developments shaped investor sentiment. Brent crude fell 51 cents, or 0.72%, to close at $70.56 per barrel, while West Texas Intermediate (WTI) crude dropped 68 cents, or 1.01%, to settle at $66.90. Oil initially hit a two-week high on concerns over Middle East instability but reversed lower after US President and Russian President discussed efforts to de-escalate the conflict in Ukraine, agreeing to a 30-day halt on attacking Ukraine energy facilities. Elsewhere, a pipeline explosion in Nigeria raised concerns about supply disruptions, though analysts remain sceptical about a near-term impact on global markets.

FX Today:

  • Euro Gains as Market Eyes 1.1000 Level: EUR/USD rose 0.22% on Tuesday to close at 1.0946, extending its recent uptrend. The pair touched a session high of 1.0954 before facing resistance, signalling a key hurdle at this level. The euro remains supported above its 50-day SMA at 1.0492, the 100-day SMA at 1.0521, and the 200-day SMA at 1.0726, reinforcing its bullish trend. The last time EUR/USD tested this level was in early November 2024, when it failed to hold above 1.0950 and reversed toward 1.0500. If the pair sustains above 1.0950, the next target is 1.1000, but failure to hold this level could lead to a decline toward 1.0900, with stronger support at 1.0800. A break below 1.0800 would shift the trend bearish, bringing the 200-day SMA at 1.0726 into focus.
  • British Pound Struggles to Extend Gains Above 1.3000: GBP/USD closed at 1.3007, rising 0.13% as the pair held above the key psychological level. The price briefly tested 1.3010 but failed to break higher, indicating resistance near 1.3020. The pound remains in an uptrend, trading above its 50-day SMA at 1.2556, the 100-day SMA at 1.2624, and the 200-day SMA at 1.2796. The last time GBP/USD was at this level was in September 2024, when it briefly surpassed 1.3000 before reversing lower. If the pair holds above 1.3000, the next upside target is 1.3100, but failure to sustain this level could see a move down to 1.2900, with stronger support at 1.2800 near the 200-day SMA. A break below 1.2800 would weaken the bullish outlook, potentially pushing the pair back toward 1.2600.
  • Canadian Dollar Holds Near 1.4300 as Inflation Picks Up: USD/CAD edged up 0.03% to close at 1.4293 as the pair found support near 1.4250. Canadian CPI inflation accelerated faster than expected in February, diminishing the odds of further rate cuts from the Bank of Canada. Despite this, the Canadian dollar failed to strengthen meaningfully, with USD/CAD still trading below its 50-day SMA at 1.4343 but holding above the 100-day SMA at 1.4230 and the 200-day SMA at 1.3948. The last time USD/CAD was at this level was in early February before surging to 1.4500. If the pair remains above 1.4250, a retest of 1.4350 is likely. However, a break below 1.4230 could expose the 200-day SMA at 1.3948 as the next major support. On the upside, a decisive move above 1.4350 would open the door for a retest of 1.4400.
  • Australian Dollar Faces Resistance as AUD/USD Struggles at 0.6390: AUD/USD declined 0.32% on Tuesday, closing at 0.6363 after failing to break through resistance near 0.6390. The pair briefly attempted to push higher but lost momentum, leading to a bearish close. AUD/USD remains above its 50-day SMA at 0.6278, but the broader trend remains weak, with the 200-day SMA at 0.6522 still acting as a major resistance level. The last time AUD/USD was at this level was in late February, when it failed to hold above 0.6380 and reversed toward 0.6200. If the pair continues to struggle near 0.6390, a pullback toward the 50-day SMA at 0.6278 could occur, with further downside potential toward 0.6250. Conversely, a sustained move above 0.6390 could shift momentum toward the 200-day SMA at 0.6522, where selling pressure is likely to increase.
  • Gold Surges Past $3,030, Setting a New All-Time High: Gold extended its rally on Tuesday, rising 1.19% to close at $3,036, breaking through the psychological resistance of $3,000 for the first time in history. The metal reached an intraday high of $3,038 before pulling back slightly, indicating initial resistance at this level. Gold remains in a strong uptrend, trading well above its 50-day SMA at $2,845, the 100-day SMA at $2,748, and the 200-day SMA at $2,621. The rally has been driven by geopolitical tensions and expectations of a Federal Reserve policy shift. If gold sustains above $3,000, the next upside target is $3,050, with potential for further gains if buying momentum persists. However, if gold fails to hold above $3,000, a short-term pullback toward $2,980 could occur, where initial support lies. Below this level, the 50-day SMA at $2,845 serves as the next major support. The uptrend remains intact, but traders will watch price action closely around $3,038, as failure to break higher could lead to a period of consolidation.

Market Movers:

  • Tesla Tumbles as RBC Cuts Price Target: Tesla fell 5.2% on Tuesday, extending its month-to-date losses to around 23%. The sell-off followed RBC Capital Markets’ decision to lower its price target on the stock, citing rising competition in the EV sector. The decline adds to Tesla’s struggles, with shares now down over 36% in the past month.
  • Alphabet Drops After Acquisition Announcement: Shares of Alphabet slid 2.7% after the company announced a $32 billion all-cash deal to acquire cloud security startup Wiz. The acquisition marks Google’s largest-ever purchase.
  • Lucid Jumps After Morgan Stanley Upgrade: Shares of Lucid surged 8.8% after Morgan Stanley upgraded the stock from underweight to equal weight. Analysts cited an emerging bullish case tied to the company’s advancements in AI technology for EVs.
  • Millrose Properties Surges on Dividend Announcement: Millrose Properties soared more than 10% after announcing a 38-cent per share dividend and raising guidance. 
  • Hims & Hers Health Drops on FDA Warning: Shares of Hims & Hers Health tumbled 9.2% after the FDA raised concerns about unapproved GLP-1 drugs for weight loss. 

Stocks ended Tuesday lower as renewed selling pressure weighed on major indices, with tech stocks leading the declines. Investors remained cautious ahead of the Federal Reserve’s interest rate decision, while uncertainty over potential tariffs from the Trump administration added to market fears. A rebound in European and Asian markets failed to lift sentiment in the US, as traders rotated away from high-growth sectors. Meanwhile, oil prices eased following discussions between Trump and Putin over Ukraine, while gold continued its rally, breaking past the $3,030 mark.