The U.S. stock markets took a hit on Tuesday as uncertainty around global trade deals weighed on investor sentiment. The Dow Jones Industrial Average slid nearly 400 points, while the S&P 500 posted back-to-back losses. The Nasdaq also ended the day in negative territory.
Stocks wavered after President Donald Trump met with Canadian Prime Minister Mark Carney and walked back on promises that trade agreements could be reached soon. This contradicted earlier comments from Treasury Secretary Scott Bessent, who had suggested deals might be announced as early as this week. Investors are also keeping a close eye on the Federal Reserve’s two-day policy meeting, which began on Tuesday.
The central bank is expected to keep interest rates steady, but traders will be listening for any comments from Fed Chair Jerome Powell on his economic outlook. Despite the market downturn, there were some bright spots.
Market reacts to trade uncertainty
U.S. crude oil prices rose more than 3% to $59.26 per barrel, although they remain down about 17% year-to-date. Diamondback CEO Travis Stice believes U.S. onshore oil production has likely peaked and will start to decline due to the recent plunge in crude prices. In corporate news, JPMorgan downgraded shares of fast-casual salad chain Sweetgreen to a neutral rating, citing waning consumer demand and excess restaurant supply.
The analyst also lowered his price target on the stock. Meanwhile, the pace of merger and acquisition activity has slowed, with the number of deals signed globally falling to the lowest level since February 2005. The value of transactions also declined, with global deals totaling $243 billion in April, about 20% below the monthly average.
As the market continues to navigate uncertainty, some analysts believe the current environment has echoes of last summer. Henry Allen, macro strategist at Deutsche Bank, noted that markets were briefly in turmoil back then as investors feared a potential downturn, but recovered quickly once it became clear a recession would be avoided. Moving forward, investors will be closely monitoring upcoming economic data and any developments on the trade front for signs of a potential turnaround in the markets.
