A sharp decline in tech stocks and escalating tensions in the Middle East sent U.S. markets lower on Tuesday, halting a two-day rally driven by a temporary absence of trade concerns.
The Nasdaq Composite led the downturn, dropping 1.7%, while the S&P 500 fell 1.1% and the Dow Jones Industrial Average lost 0.6%. Communication services and information technology stocks were the hardest hit, extending losses for high-valuation companies that had been market leaders last year.
Market Uncertainty and Economic Concerns
Investor sentiment weakened as a new fund manager survey revealed a record shift away from U.S. stocks and increasing concerns about global economic growth.
“The U.S. economy faces headwinds from erratic tariff policies, weaker growth forecasts, and stretched market valuations,” said Seema Shah, chief global strategist at Principal Asset Management.
Tensions also remained high on the geopolitical front. President Donald Trump continued pressing for a swift resolution to the Ukraine war, holding talks with Russian President Vladimir Putin. Trump’s stance has spurred a European rearmament push, with German stocks climbing after Germany’s parliament approved a major defense-spending package.
Tech Sector Hit Hard
Nvidia was the Dow’s worst performer as the company’s flagship AI conference kicked off. CEO Jensen Huang highlighted the growing demand for computing power, stating that AI advancements will require at least 100 times the processing capacity predicted just a year ago.
With mounting economic and geopolitical uncertainties, investors are bracing for further volatility in the days ahead.
