Trade Fears and Fed Uncertainty Slam US Stocks: Dow Plunges 300 Points

A resurgence of trade war anxieties, coupled with looming Federal Reserve decisions, sent U.S. equities reeling on Wednesday. The Dow Jones Industrial Average (DJIA) tumbled approximately 300 points, a 0.7% drop, snapping a two-day winning streak and pushing the index back into a bearish trend. The S&P 500 followed suit, shedding nearly 1.1%, or 60 points, as investors struggled to find safe haven amidst the mounting uncertainty.

This downturn marks a return to the market’s recent volatility, fueled by persistent geopolitical tensions emanating from the White House. President Trump’s administration, known for its fluctuating trade policies, has once again injected fear into the markets with renewed tariff discussions. 1 The initial bullish momentum, sparked by hints from Treasury Secretary Scott Bessent that tariffs might be less sweeping than previously anticipated, quickly evaporated as the administration’s unpredictable approach to trade negotiations took center stage.  


Adding to the market’s unease is the Federal Reserve’s (Fed) upcoming rate decision, scheduled for Wednesday. While market expectations, as reflected in the CME’s FedWatch Tool, largely anticipate the Fed to maintain current rates for the next two meetings, with a potential quarter-point cut in June, the release of the Federal Open Market Committee’s (FOMC) updated interest rate forecasts could significantly alter these projections. Any deviation from current market expectations could trigger further volatility and shake investor confidence.

The broad sell-off impacted all sectors, leaving investors with limited options for protection. Even news of a partnership between Nvidia (NVDA) and General Motors (GM) to develop self-driving car technology failed to buoy their stocks. Nvidia fell by 2.5%, trading near $116 per share, while GM dipped by approximately 1%, testing below the $50 mark. The market’s reaction underscored the difficulty of generating investor enthusiasm solely through AI-related announcements amidst the prevailing economic anxieties.

Technically, the Dow Jones faces potential rejection from the 200-day Exponential Moving Average (EMA) near the critical 42,000 level. The emergence of a fresh bearish daily candlestick suggests that buyers are rapidly losing momentum, leaving the index vulnerable to further declines. As trade and Fed uncertainties persist, investors are bracing for continued volatility and potential further losses.