Global markets reacted on Tuesday as Israeli airstrikes on Gaza escalated geopolitical tensions, sending Wall Street into decline and pushing gold prices to record highs. The selloff came as the U.S. Federal Reserve convened for a crucial monetary policy meeting amid rising economic uncertainty.
According to Reuters, the latest round of Israeli missile attacks resulted in the deaths of over 400 people in Gaza, intensifying Middle East tensions. The renewed conflict also overshadowed a call between U.S. President Donald Trump and Russian President Vladimir Putin, where both leaders discussed potential terms for ending Russia’s ongoing war in Ukraine.
In response, all three major U.S. stock indexes turned negative, with tech-related megacap stocks dragging the Nasdaq Composite down the most. The Dow Jones Industrial Average dropped 334.15 points, or 0.80 per cent, to 41,505.78, while the S&P 500 fell 68.53 points, or 1.21 per cent, to 5,606.59. The Nasdaq Composite plunged 313.10 points, or 1.76 per cent, to 17,496.33.
“There’s a lot of turmoil in the world, and things can change direction pretty quickly,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.
Meanwhile, the Federal Reserve’s two-day meeting, expected to conclude with interest rates remaining unchanged, added to market volatility. Investors remain uncertain about the central bank’s approach to inflation, particularly given the Trump administration’s unpredictable tariff policies.
“The markets don’t know where tariffs stand—whether they’re on or off,” Tuz added. “I was more surprised by the rally of the past two days than by today’s weakness.”
Reuters added that despite the downturn, some United States economic indicators showed resilience.
In Europe, Germany’s parliament approved a major government spending overhaul, causing the euro to fluctuate. However, the decision helped lift European stocks, pushing German shares close to record highs.
As geopolitical uncertainty deepens, investors are closely watching developments in the Middle East and the Federal Reserve’s stance on monetary policy, both of which could dictate market direction in the coming weeks.
