Markets pulled back on Tuesday as the recent tech-led rally lost steam. After six straight days of gains, investors took a breather and turned more cautious. Some of the biggest names in technology saw renewed selling, weighing on overall market sentiment. Uncertainty around trade talks and political developments in Washington also added to the pause. While the broader trend remains positive, the day reflected a shift in tone as traders looked for more clarity before pushing markets higher.

Key Takeaways:

  • Dow Ends Lower as Momentum Fades: The Dow Jones Industrial Average fell 114 points on Tuesday, retreating after several days of gains as sentiment cooled. While the blue-chip index had recently benefited from broad-based risk appetite, a shift away from high-growth stocks and weaker political signals weighed on performance. 
  • S&P 500 Snaps Six-Day Rally: The S&P 500 declined 0.39%, ending its longest winning streak since early May. Although the index remains near recent highs after a powerful rebound from April lows, Tuesday’s move suggested the market may be entering a period of consolidation. 
  • Nasdaq Dips as Tech Stocks Retreat: The Nasdaq Composite lost 0.38%, pressured by a broad selloff in major tech names. Nvidia slipped nearly 1%, while Apple, Microsoft, Meta Platforms, and AMD all ended in negative territory. 
  • Europe Rises on Strong Earnings, Consumer Sentiment Lift: European equity markets extended their upward momentum on Tuesday, lifted by robust earnings results and an improvement in regional sentiment data. The Stoxx Europe 600 rose 0.7%, with gains broad-based across major indices. London’s FTSE 100 led the region with a 0.94% advance, driven by strength in consumer and telecom names, such as Vodafone. Paris’ CAC 40 and Milan’s FTSE MIB gained 0.75% and 0.89%, respectively, while Frankfurt’s DAX rose 0.3%, breaching the 24,000 level for the first time and setting a fresh all-time high. Meanwhile, the European Commission reported a notable uptick in consumer confidence, with euro zone sentiment improving to -15.2 in May from -16.6 in April, exceeding expectations. 
  • Asia Climbs as Central Banks Cut Rates to Bolster Growth: Asian markets closed mostly higher on Tuesday as regional investors welcomed monetary easing from both China and Australia. The People’s Bank of China lowered its one-year and five-year loan prime rates by 10 basis points, providing fresh stimulus amid intensifying trade tensions. Hong Kong’s Hang Seng index jumped 1.49%, while China’s CSI 300 rose 0.57%. In Australia, the ASX 200 climbed 0.58% after the Reserve Bank reduced its cash rate to 3.85%, its lowest since May 2023, signalling greater comfort with the recent cooling in inflation. Japanese equities were quieter; the Nikkei added 0.08% and the Topix rose 0.02%, while sovereign bond yields rose sharply, with Japan’s 40-year yield hitting a record 3.56%. South Korea’s Kospi was flat, and the Kosdaq inched up 0.25%. Investors also cheered the strong debut of Contemporary Amperex Technology in Hong Kong, which soared over 11%, reflecting healthy risk appetite in the tech and green energy sectors.
  • Oil Dips on Iran Talks and China Demand Concerns: Crude prices edged lower as markets weighed ongoing US-Iran nuclear discussions and a cautious economic outlook from China. Brent settled at $65.67 and WTI at $62.62, both slipping slightly on the day. Scepticism over a near-term deal with Iran, which could lift export volumes, combined with lukewarm signals from China’s economy, has added uncertainty to the demand outlook.
  • Treasury Yields Hover Near Key Levels: Yields on long-term US Treasurys fluctuated Tuesday as investors evaluated the implications of Moody’s recent downgrade and the Fed’s next move. The 30-year yield remained just below the critical 5% mark, while the 10-year yield held near 4.49%.

FX Today:

  • EUR/USD Strengthens as Uptrend Pushes Toward 1.1300: EUR/USD climbed to 1.1278 on Tuesday, rising 0.33% and extending its advance for a third consecutive session. The pair has now gained nearly 1.5% since last Thursday. EUR/USD has stabilised above the 50-day simple moving average at 1.1121. Tuesday’s close puts the pair within striking distance of the 1.1300 round figure, a level that has capped upside since early May. A breakout above this resistance could trigger a broader continuation move toward 1.1450 and potentially the 1.1500 handle, aligning with the March highs. The pair continues to benefit from a supportive trend backdrop, with both the 100-day and 200-day SMAs trending higher at 1.0779 and 1.0802, and forming a strong base well below price. Any short-term pullback may find support first near 1.1180, followed by the 1.1120–1.1100 zone, where buyers have repeatedly stepped in. 
  • GBP/USD Inches Higher as Bulls Eye Breakout: GBP/USD edged up modestly on Tuesday to close at 1.3388, adding 0.20% on the session. The pair has been trading with a clear bullish bias since early April, supported by improving market sentiment, resilient UK macro data, and widespread dollar softness. Price action has been respecting a rising trendline since late March, with dips consistently finding buyers around the 50-day simple moving average, now located at 1.3134. The 100-day and 200-day SMAs, at 1.2819 and 1.2887 respectively, remain well below the current level. So far, price has failed to close decisively above the 1.3400 round figure, but bullish consolidation beneath resistance suggests buyers are preparing for a breakout. If cleared, the next target sits at 1.3500, with a possible extension toward the 1.3660 region, a key zone last seen in mid-2023. On the downside, initial support is seen near 1.3250, followed by 1.3150 and the dynamic 50-day SMA. 
  • USD/JPY Slides for Fourth Day as Downward Momentum Builds: USD/JPY declined again on Tuesday, closing at 144.52 with a 0.23% loss and extending its slide for a fourth consecutive session. This continued weakness follows a failed breakout above 146.50 last week. The 50-day SMA at 145.99 was breached on Monday and now acts as immediate resistance, while the 100-day and 200-day SMAs, sitting at 149.69 and 149.56, loom higher and add to the downward pressure. Tuesday’s price action saw the pair test support near 144.00, a critical zone that, if broken, could lead to a deeper retreat toward 143.00 or even 141.80. Any recovery would need to clear 146.00 to shift momentum back in favour of bulls. 
  • AUD/USD Retreats as Resistance at 0.6500 Caps Rally: AUD/USD pulled back on Tuesday to finish at 0.6418, shedding 0.57% after failing once again to sustain a move above the key 0.6500 resistance level. The pair had briefly climbed above that zone on Monday, only to reverse course and settle below the 200-day simple moving average, which is now hovering around 0.6455. This failed breakout attempt suggests that upside momentum is losing steam, at least temporarily, and that sellers are beginning to defend higher levels more aggressively. Despite the pullback, AUD/USD remains above its 50-day and 100-day SMAs, at 0.6335 and 0.6301, respectively, offering a near-term cushion for price. The rejection near 0.6500 may mark the beginning of a corrective phase unless buyers can regroup quickly. A daily close below 0.6380 would add pressure and expose deeper support near 0.6300 and potentially 0.6225. On the flip side, if bulls manage to recover control and retake 0.6500 with conviction, the next significant resistance lies at 0.6600, followed by 0.6675.
  • Gold Climbs Toward $3,300 as Bulls Reassert Control: Gold rose sharply on Tuesday, settling at $3,294 after gaining 1.99% in a strong session driven by renewed bullish appetite. After briefly testing $3,177 last week, buyers stepped in, defending trend support and igniting a rebound that is now stretching toward the $3,300 barrier. The 100-day and 200-day SMAs at $2,987 and $2,797, respectively, remain comfortably below current price, reaffirming the broader uptrend that began in early 2024. If price breaks decisively above $3,300, the next resistance lies between $3,350 and $3,380, with the April high above $3,500 representing the longer-term bullish target. On the downside, $3,250 now becomes minor support, followed by the psychological $3,200 level and the rising 50-day SMA. 

Market Movers:

  • D-Wave Quantum Soars on New System Launch: D-Wave Quantum surged 25.9% after unveiling its next-generation quantum computing platform, Advantage2. The company said the system significantly expands its processing capabilities, drawing investor optimism.
  • Agilysys Jumps on Earnings Beat: Shares of Agilysys rallied 22.1% after the hospitality software firm beat analyst expectations for its fiscal fourth quarter. Adjusted EBITDA came in at $14.8 million, topping the $11.3 million estimate.
  • Amer Sports Pops After Strong Results and Raised Outlook: Amer Sports rose 19.1% following a solid Q1 earnings beat and a bullish update to its full-year forecast. Adjusted earnings of 27 cents per share came in well ahead of the 15-cent estimate. 
  • Moderna, Pfizer Climb on Booster Guidance: Moderna gained 6.1% after the FDA issued new guidance for Covid-19 booster approvals based on patient risk profiles. Pfizer also benefited, adding 2.3% as investors welcomed the regulatory clarity.
  • Eagle Materials Slumps After Weak Earnings: Shares of Eagle Materials dropped 8.8% following a miss on both earnings and revenue for its fiscal fourth quarter. Adjusted EPS of $2.08 came in well below the $2.48 estimate, while revenue of $470.2 million also missed expectations.

Tuesday’s pullback signalled a moment of caution in what has been a strong multi-week rally. While the broader trend remains intact, investors showed signs of hesitation as tech stocks faltered and political uncertainty resurfaced. A key point of concern emerged in Washington, where President Trump failed to win over House Republicans opposing a major tax bill. At the same time, overseas markets benefited from supportive policy actions and strong earnings. Looking ahead, traders will be watching closely for updates on trade talks, fiscal policy developments, and key economic data later in the week.