The NASDAQ 100 index faced a significant decline, plummeting over 315 points, while the S&P 500 saw an 80-point surge erased, signaling a turbulent period for Wall Street. This downturn follows a brief uptick in stock prices, with the Dow Jones Industrial Average down by 256 points (0.6%), the S&P 500 decreasing by 1%, and the Nasdaq Composite experiencing a 1.6% drop.

Geopolitical tensions and escalating trade war concerns have prompted investors to offload stocks, leading to this renewed market downturn. The S&P 500 recently entered a correction phase, regaining some ground before sliding back down. Since yesterday afternoon, the index has shed over 100 points, while the Nasdaq remains in correction territory, still showing a decline of more than 10% from its previous peak.

Tech stocks bore the brunt of this decline, with Tesla suffering a notable 5% drop after RBC Capital Markets revised its price target downward due to increased competition in the electric vehicle sector. Tesla has now lost nearly 36% in the past month. Other tech giants like Palantir and Nvidia also faced losses, with the Technology Select Sector SPDR Fund (XLK) falling over 1%.

Investors are closely monitoring President Donald Trump’s impending decision on tariff exemptions for Canada and Mexico, scheduled for April 2. This uncertainty has contributed to choppy market conditions, prompting some investors to shift away from high-growth tech stocks towards sectors that have underperformed in recent years.

As the Federal Reserve’s two-day policy meeting kicks off, market participants are eagerly awaiting Wednesday’s interest rate decision and Fed Chair Jerome Powell’s subsequent press conference. Despite expectations of unchanged rates, concerns linger regarding inflation and employment data in the coming months.

Amidst these economic uncertainties, consumer sentiment in the U.S. has deteriorated, with growing fears of a recession. Unemployment expectations have surpassed levels seen in 2020 and are at their highest since 2008. Survey data indicates that a significant portion of Americans believe the country is already in a recession, with household income expectations plummeting and inflation projections hitting multi-year highs.

The market’s response to the Fed’s rate cuts since September 2024 has been mixed, with some indicators pointing towards an impending recession. Institutional sentiment reflects a bearish outlook, with recession probabilities on the rise. The job market is also showing signs of strain, particularly in the professional and business services sector.

In conclusion, the recent market turbulence, exacerbated by geopolitical uncertainties and trade tensions, has sparked fears of an economic downturn. Investors are bracing for further volatility as they await key decisions from policymakers and assess the evolving economic landscape.