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On Tuesday, US stocks experienced a significant downturn, particularly within the technology sector, including Elon Musk’s Tesla. This selloff occurred as investors expressed ongoing concerns regarding President Donald Trump’s economic and trade policies.
By mid-afternoon in New York, the blue-chip S&P 500 had declined by 1.1 percent, with all 11 sectors of the index in negative territory. Consumer cyclicals, which typically decrease during times of economic anxiety, were among the hardest hit. The tech-dominated Nasdaq Composite saw a 1.6 percent drop, erasing gains made in a rally the previous day. Tesla’s shares fell by 4.6 percent, continuing a decline that has halved its value since peaking in December, while Nvidia’s shares decreased by 1.5 percent ahead of CEO Jensen Huang’s keynote speech at the company’s developer conference.
These declines reflect ongoing investor apprehension about Trump’s tariffs targeting major US trading partners and indications that these policies may be hampering growth and fueling inflation. A survey by Bank of America, released on Tuesday, revealed the most substantial reduction in US equity allocations by investors in March.
A survey conducted by the New York Federal Reserve and released on the same day indicated that the regional business environment was “considerably worse than normal.” Employment figures dropped, and input prices for industry rose at the fastest rate in nearly two years. Another Federal Reserve report showed a 0.7 percent increase in US industrial production in February, surpassing the 0.2 percent expectation by analysts. Bradley Saunders of Capital Economics suggested that this may ease fears of an impending recession in the US economy, though he cautioned about future challenges due to ongoing tariff impacts.
Technology stocks, which once performed exceedingly well, have been among the most affected as investors move away from riskier assets. An index tracking the “Magnificent Seven”—Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia, and Tesla—has fallen 17 percent since the S&P 500 reached a record high on February 19.
Market participants were also anticipating the outcome of the latest Federal Reserve meeting scheduled for Wednesday. Although it is widely expected that the central bank will maintain current interest rates, any comments from Fed Chair Jay Powell regarding the state of the US economy will be closely scrutinized.
The dollar dipped by 0.1 percent against a basket of rival currencies, having already erased gains made since the US presidential election in November.
