Dow Jones, Nasdaq Composite, S&P500 dip as Fed decision looms, trade hopes linger

US stocks ended lower on Tuesday as caution prevailed ahead of the Federal Reserve’s policy decision and fresh developments on the global trade front. This will be the first Fed meeting since Trump's "Liberation Day" tariffs on April 2.

The Dow Jones Industrial Average fell 210 points, or 0.5 percent, while the S&P 500 and Nasdaq Composite declined 0.5 percent and 0.6 percent, respectively. Losses were led by major technology and financial names, with Nvidia and Meta Platforms shedding 1 percent and 1.5 percent. Tesla dropped over 2 percent after April sales in Germany and the UK hit a two-year low, even as demand for electric vehicles rose. Shares of Goldman Sachs also retreated, weighing on the blue-chip index.

Investor sentiment was tempered by the absence of concrete trade deals, despite optimistic rhetoric from US officials. President Donald Trump’s scheduled meeting with Canadian Prime Minister Mark Carney on Tuesday marked the start of formal negotiations since Carney assumed office earlier this year.

Hopes were stoked after Treasury Secretary Scott Bessent said the US was “very close to some deals” and suggested that agreements with key partners could be wrapped up sooner than expected. “Roughly 97 to 98 percent of our trade deficit is with just 15 countries,” Bessent told lawmakers. “I’d be surprised if more than 80 to 90 percent of those deals aren’t done by year-end—if not sooner.”

Still, markets remained unconvinced in the absence of formal announcements. Meanwhile, data from the Institute for Supply Management showed stronger-than-expected activity in the US services sector for April, offering some reassurance on domestic growth.

All eyes now turn to the Federal Reserve, which began its two-day policy meeting on Tuesday. Markets are betting overwhelmingly on a status quo, with Fed Funds futures pricing in just a 3.2 percent chance of a rate cut. Still, investors will scrutinise Fed Chair Jerome Powell’s remarks for clues on how the central bank is reading inflation trends and trade risks.

The downbeat mood followed Monday’s retreat on Wall Street, where the S&P 500 snapped a rare nine-day winning streak — its longest since 2004 — with a 0.6 percent drop. The Nasdaq Composite fell 0.7 percent, and the Dow shed 0.2 percent, as trade nerves resurfaced.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.