US equity markets ended Tuesday's trading session in negative territory, with the technology-heavy Nasdaq Composite bearing the brunt of the selling pressure. The cautious mood among investors was driven by anticipation of crucial inflation data and the upcoming monetary policy announcement from the Federal Reserve.
Market Performance: A Day of Declines
The Dow Jones Industrial Average closed down by 120.62 points, or 0.3%, settling at 38,747.42. The broader S&P 500 index also retreated, losing 14.40 points, or 0.3%, to finish at 5,375.72. The most significant drop was seen in the Nasdaq Composite, which fell by 80.62 points, or 0.5%, ending the day at 17,343.55.
The session was marked by a notable pullback in the shares of major technology companies. Apple Inc. saw its stock decline by 1.9%, while semiconductor giant Nvidia gave up 0.3% of its value. This sector-wide weakness was a primary driver behind the market's overall downward move.
Investor Focus on the Federal Reserve and Inflation
Market participants are in a holding pattern, awaiting the outcome of the Federal Reserve's two-day policy meeting concluding on Wednesday. The central bank is widely expected to keep interest rates unchanged at their current elevated levels. However, investors will scrutinize the Fed's updated economic projections and Chair Jerome Powell's press conference for clues about the future path of monetary policy.
Adding to the pre-meeting jitters is the release of the Consumer Price Index (CPI) report for May, scheduled for Wednesday morning. This key inflation gauge will provide critical insight into whether price pressures are continuing to ease. The core CPI, which excludes volatile food and energy prices, is forecast to have risen by 0.3% month-over-month in May.
"The market is in a classic wait-and-see mode," said a market analyst. "Between the Fed's decision and the inflation print, there's more than enough reason for traders to take some risk off the table, especially in high-flying tech names that are sensitive to interest rate expectations."
Other Market Movers and Global Context
Beyond the tech sector, other stocks also made headlines. Southwest Airlines shares dropped 7% after the company revised its second-quarter revenue forecast downward. In contrast, shares of Eli Lilly gained 0.6%, and biotechnology firm Affimed NV surged by an impressive 31.6%.
In the bond market, the yield on the benchmark 10-year US Treasury note edged slightly higher to 4.40%. In European markets, major indices like the FTSE 100 and the DAX closed with modest gains. Meanwhile, in Asia, Japan's Nikkei 225 index rose by 0.3%, while Hong Kong's Hang Seng index fell by 1.0%.
The overall sentiment reflects a market grappling with mixed signals. While hopes for eventual interest rate cuts later in the year have supported stocks, persistently strong economic data has forced investors to recalibrate their expectations regarding the timing and extent of such easing. The next 24 hours, with the CPI data and Fed announcement, are poised to provide much-needed direction.
