Tech stocks sink as gold surges to a new record
Nvidia dropped as the conference annual of software developers kicked off. Tesla fell after RBC cut its price target on the stock. Gold soared to an all-time high of $3,038.90 per ounce as investors sought safe-haven assets. Alphabet declined following the $32 billion acquisition of cybersecurity firm Wiz.
- Dow Jones: -0.62%
- S&P 500: -1.07%
- Nasdaq Composite: -1.71%
US stock market slumps as investors await Fed decision
On Tuesday, US stock markets closed in the red, snapping a two-day rally as investors moved to the sidelines ahead of the Federal Reserve's monetary policy decision and the potential impact of Donald Trump's trade strategy.
Fed's policy meeting expectations
On Wednesday, the Federal Reserve is set to release its policy statement, with analysts widely expecting no change in interest rates. Additionally, the Fed will unveil an updated Summary of Economic Projections (SEP), which could provide clues on future monetary policy actions.
Currently, markets are pricing in a 60-basis-point rate cut over the year. However, the Fed remains cautious, with several officials warning that the central bank will assess the impact of tariffs on the economy before making any moves.
Major US stock indices drop into the red
US stock indices came under significant selling pressure:
- Dow Jones Industrial Average fell 260.32 points (-0.62%), closing at 41,581.31.
- S&P 500 dropped 60.46 points (-1.07%) to 5,614.66.
- Nasdaq Composite posted the steepest decline, plunging 304.55 points (-1.71%) to 17,504.12.
- Silver fell 0.2% to $33.97 per ounce.
- Platinum dropped 0.4% to $992.85 per ounce.
- Palladium edged 0.1% lower to $966.24 per ounce.
Inflation risks: unexpected rise in import prices
Markets faced additional pressure from unexpected inflation data.
In February, US import prices went up, largely due to the rising cost of consumer goods. This inflationary signal has raised concerns among investors about persistent price pressures and potential Fed policy adjustments.
As markets are caught between expectations of rate cuts and fears of rising inflation, volatility remains high, making future market direction uncertain.
Markets attempt to stabilize, but remain under pressure
After a prolonged decline that pushed the S&P 500 and Nasdaq down more than 10% from recent highs, US stock indices are making attempts to stabilize. However, uncertainty persists, and investors remain cautious.
Dow Jones enters correction territory
The Dow Jones Industrial Average is now just 2% away from entering correction territory, reflecting continued pressure on major US stocks. The hardest-hit sectors include technology and high-growth companies. The S&P 500 Growth Index (.IGX) dropped 2.2%, while the Communication Services sector (.SPLRCL) was among the worst performers, falling 2.14%.
Alphabet's largest deal in history triggers a sell-off
Big acquisitions don't always excite investors. Alphabet (GOOGL.O) fell 2.2% after announcing a $32 billion acquisition of cybersecurity firm Wiz. Although this is the largest deal in the company's history, market participants reacted cautiously, fearing excessive spending and potential integration risks.
Nvidia declines as investors weigh CEO's comments
Nvidia (NVDA.O) shares dropped 3.35% as investors assessed the company's outlook. CEO Jensen Huang reassured the market that Nvidia is prepared for industry shifts, particularly the transition from AI model training to practical AI applications. However, investors remained cautious, leading to further selling pressure.
Tesla plunges as analysts cut forecasts
The worst performer of the day was Tesla (TSLA.O), which plummeted 5.34% after RBC analysts downgraded the stock.
RBC slashed Tesla's price target from $320 to $120, citing weaker expectations for autonomous driving technology and robotaxi market share. Tesla's market cap has already fallen nearly 45% this year, fueling investor concerns over further declines.
Market pressure persists
Despite attempts at stabilization, US stock indices remain under pressure.
Investors are closely watching economic data, corporate earnings, and Fed decisions, which could shape the next market move.
Gold hits record highs amid global uncertainty
Gold prices surged to an all-time high on Wednesday, as rising geopolitical tensions in the Middle East and uncertainty in trade policy made the precious metal a preferred safe-haven asset.
Another key factor supporting gold prices is the market's anticipation of the Federal Reserve's monetary policy decision.
As of 04:15 GMT, spot gold traded at $3,035.12 per ounce, after hitting a record high of $3,038.90 earlier in the session. US gold futures inched up 0.1% to $3,042.20 per ounce.
According to Tim Waterer, Chief Market Analyst at KCM Trade, gold has reaffirmed its status as a "safe haven" amid economic instability, trade uncertainties, and geopolitical risks.
Will the Fed give gold another boost?
Investors expect that if the Federal Open Market Committee (FOMC) delivers a dovish statement, it could provide additional support for gold prices.
"If the Fed expresses concerns about trade barriers impacting economic growth, it could be a green light for gold to push above $3,050 per ounce," Waterer noted.
Market participants are also awaiting Fed Chair Jerome Powell's speech, scheduled for 18:30 GMT, which could offer insights into the Fed's policy stance and impact gold's trajectory.
Other precious metals under selling pressure
Despite gold's strong rally, other precious metals declined:
- Silver fell 0.2% to $33.97 per ounce.
- Platinum dropped 0.4% to $992.85 per ounce.
- Palladium edged 0.1% lower to $966.24 per ounce.
Markets remain in a state of heightened anticipation ahead of the Fed's decision and global economic developments, which will likely influence metal prices in the near term.
