Wall Street indices sink deeper into red as caution spikes ahead of Fed outcome

Wall Street indices snapped their two-day rebound to slip back into the red.

Wall Street indices sunk deeper into the red, deepening early losses on 18 March as investors turned risk averse in anticipation of the Federal Reserve’s two-day monetary policy meeting that begins on Tuesday.

The downturn marks a return to weeks-long selling pressure after a brief two-day rebound. Investor jitters have been fuelled by concerns that Donald Trump’s steadfast tariff policies could push the US economy into a recession, triggering heightened market volatility.

The Dow Jones Industrial Average fell 299 points, or 0.7 percent, while the S&P 500 dropped 1.2 percent, edging closer to correction territory as it traded nearly 9 percent below its record high. The Nasdaq Composite declined nearly 2 percent, cementing its position in correction mode—defined as a 10 percent drop from a recent peak.

Despite last week’s pullback, the S&P 500 managed to reclaim some ground in the past two sessions. However, all three major indices remain negative for the year, underscoring the market’s broader struggles.

With tariff-related developments from the White House continuing to weigh on sentiment, investor attention is now shifting to the Federal Open Market Committee’s (FOMC) rate decision and updated economic projections.

Traders will closely monitor the Fed’s interest rate announcement and Chair Jerome Powell’s subsequent press conference. Market expectations overwhelmingly predict that rates will remain unchanged at 4.25–4.50 percent, with CME FedWatch data indicating a 99 percent probability of a hold.

While the decision aligns with the Fed’s cautious stance amid economic uncertainty, the spotlight will be on the dot plot, which outlines policymakers’ interest rate expectations. The December projections suggested fewer rate cuts than investors had hoped for in 2025. Any shift in this outlook could prove pivotal in shaping market sentiment.

As the Fed navigates a delicate balancing act between growth and inflation, Powell’s remarks on future rate cuts and the broader economic outlook will be closely scrutinised.

Among individual stocks, Tesla—one of the hardest-hit names during the recent correction—fell another 4 percent on Tuesday after RBC Capital Markets lowered its price target, citing rising competition in the electric vehicle (EV) market. The stock has now plunged 35 percent over the past month.

The weakness extended beyond Tesla, with other major tech stocks also taking a hit. Palantir dropped more than 3 percent, while Nvidia declined over 2 percent, further adding to the sector’s recent struggles.