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U.S. stocks fell sharply on Tuesday in Technology Group stocks, including Elon Musk’s Tesla sold out as investors continue to mess with President Donald Trump’s economic and trade policies.
The Blue Tip S&P 500 had fallen 1.1% by mid-afternoon in New York, with all 11 sectors in the index winning negative territory and all of the consumer circular sectors.
The high-tech Nasdaq composite dropped by 1.6%, erasing Monday’s rally. Tesla fell to 4.6%, extending the recent decline, which was reduced by half from its December peak.
The decline is the latest indication that investors are deeply concerned about Trump’s tariffs on America’s biggest trading partner, and that they are increasing signs of slowing growth and increasing inflation. A Bank of America survey released Tuesday showed investors had “the biggest ever” cut in US stock allocations in March.
A survey of New York Federal Reserve business leaders released Tuesday showed that the business environment in the region was “a lot worse than normal” as employment fell and industry input prices rose at a fast pace in almost two years.
According to another Fed report, US industrial production rose 0.7% in February, far surpassing the expected increase of over 0.2% by analysts. Reading “should raise concerns that the (US) economy is at the pinnacle of the recession,” Bradley Sanders said.
However, he warned that Trump’s “draw” from aggressive tariffs “is yet to be in good condition”, meaning that it “has been downsided for (US) industry for the next few months.”
Previously, investors moved from risky holdings, so the previous high-flying tech stocks were mostly high, tracking the so-called epic seven of Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla, down 17% since the S&P 500 hit a record high on February 19th.
Traders were also preparing for the outcome of the latest Federal Reserve meeting on Wednesday. Investors are widely hopeful that central banks will not change interest rates, but tips from Federal Reserve Chair Jay Powell on the health of the world’s largest economy will be closely monitored.
The dollar fell 0.1% against rival baskets. The currency has already wiped out all its profits since the US presidential election in November.
