The New York stock market declined on Tuesday.
The market had gained for two consecutive days since the weekend before dropping for the first time in three days.
Investors turned highly cautious as the Federal Reserve started its two-day Federal Open Market Committee (FOMC) meeting.
While the Fed is widely expected to keep interest rates unchanged at 4.25% to 4.50% when it concludes its meeting on Wednesday, investors are on high alert for any signals from Fed Chair Jerome Powell regarding potential future rate cuts.
The market dropped sharply, driven by cautious sentiment ahead of the FOMC meeting and disappointment surrounding Tesla and Nvidia.
Markets retreat after three-day rally
Tech stocks led the decline on Wall Street.
The tech-heavy Nasdaq saw the largest losses, plunging 304.54 points (1.71%) to close at 17,504.12. The index has now shed 9.4% year-to-date.
The Nasdaq remains in correction territory, down over 13% from its all-time high of 21,173.89 set on December 16 last year.
The S&P 500, a broader measure of the market, fell 61.45 points (1.06%) to end at 5,614.66. Based on its closing price on March 13, the index entered a correction phase but escaped with two consecutive days of gains starting March 14. Despite a drop of over 1%, it remains only 8.6% below its recent peak.
The Dow Jones Industrial Average, comprising 30 blue-chip stocks, shed 260.32 points (0.62%) to finish at 41,581.31.
The CBOE Volatility Index (VIX), often referred to as Wall Street’s “fear index,” spiked 1.19 points (5.81%) to 21.70. The VIX has consistently traded above the key 20-point level throughout the month, indicating elevated investor anxiety.
Tesla slumps amid mounting challenges
All members of the Magnificent Seven big tech stocks retreated.
Tesla and Nvidia experienced the steepest declines.
Tesla’s stock price tumbled $12.69 (5.33%) to $225.31, while Nvidia dropped $4.09 (3.43%) to $115.43.
Tesla faced a barrage of negative news.
Its Chinese rival, BYD, delivered a significant shock when it unveiled the “Super e-Platform” charging technology, which allows 400 km of range from just a five-minute charge.
A strong competitor emerged for Tesla’s next-generation fully autonomous driving (FSD) technology, as Chinese EV startup Zeekr announced the launch of free self-driving services starting that day.
Analysts revised their target prices downward.
Following Mizuho’s reduction of its Tesla target from $515 to $430 the previous day, RBC slashed its forecast from $440 to $320.
RBC echoed Mizuho’s concerns about weakening demand for Tesla’s electric vehicles as the reason for the revision.
However, RBC suggested that worries over Tesla’s demand were exaggerated, predicting a potential stock rebound driven by price cuts for its Full Self-Driving package and the release of robotaxis.
Both RBC and Mizuho recommend buying Tesla stocks.
Nvidia shares plunged after CEO Jensen Huang delivered the keynote address at the GPU Technology Conference (GTC).
Huang’s announcements of plans to release the Blackwell Ultra chip in the second half of this year and the next-generation Vera Rubin semiconductor in late 2025 failed to impress investors.
M7 all fall
While Tesla and Nvidia led the decline, the remaining five Magnificent Seven stocks also struggled.
Apple briefly rose by over 0.5% but reversed course in the afternoon, closing at $212.69, up $1.31 (0.61%).
Alphabet’s share price fell $3.62 (2.20%) to $160.67, while Microsoft’s fell $5.18 (1.33%) to $383.52.
Meta Platforms’s share price plummeted $22.53 (3.73%) to $582.36, while Amazon’s slipped $2.92 (1.49%) to $192.82.
