Wall Street ended sharply lower and gold surged to record highs on Tuesday as the U.S. Federal Reserve convened for its two-day monetary policy meeting while economic uncertainty mounted.
In the Middle East, a round of Israeli missile attacks on the Gaza Strip killed over 400 people, feeding investor jitters about that region.
But other geopolitical tensions eased after the Kremlin announced Russian President Vladimir Putin had agreed to a proposal from U.S. President Donald Trump to stop targeting Ukrainian energy targets for the next 30 days.
A vote by Germany’s parliament to overhaul government spending caused the euro to gain against the dollar, boosted European stocks and sent German shares to near-record highs.
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“The truth is Europe has lagged significantly in terms of economic growth and productivity,” said Ryan Detrick, chief market strategist at Carson Group in Omaha. “With President Trump in the White House, Europe might be realizing that they might need to do some things more on their own to stimulate their economy.”
All three major U.S. stock indexes posted steep losses, with weakness in tech-related megacap stocks dragging the tech-laden Nasdaq down 1.7%.
“The word of the year in 2025 has clearly been uncertainty,” Detrick added. “And we have seen rotation out of the United States and into other areas around the globe.”
“So today is almost a microcosm of the whole year.”
The U.S. Federal Reserve has gathered for its two-day monetary policy meeting, which is expected to culminate in the central bank leaving its key interest rate unchanged until further inflation progress is made and the effects of Trump’s erratic tariff policies are known.
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A strong rebound in single-family housing starts and robust industrial output data provided some reassurance that the U.S. economy was not in danger of imminent recession.
The Dow Jones Industrial Average fell 260.32 points, or 0.62%, to 41,581.31, the S&P 500 fell 60.46 points, or 1.07%, to 5,614.66 and the Nasdaq Composite fell 304.55 points, or 1.71%, to 17,504.12.
European shares edged higher and German stocks hovered near record highs as the German parliament approved a debt reform package to boost Europe’s biggest economy.
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