Wall indices slip into red as caution spreads ahead of FOMC meet; S&P 500 snaps 3-day win

US stock markets wavered in early trade on 18 March as investors adopted a cautious stance ahead of the Federal Reserve’s two-day monetary policy meeting, set to begin later today. The fall snapped a brief two-day rebound, pulling markets back into their recent losing streak after weeks of volatility. Softer economic data and President Donald Trump’s unpredictable tariff policies have kept investors on edge about the financial health of the US economy.

The Dow Jones Industrial Average fell 223 points or 0.5 percent, while the S&P 500 slid 1 percent, edging closer to correction territory as it remained about 8.6 percent below its record high. The Nasdaq Composite suffered the steepest decline, dropping 1.7 percent.

Despite last week’s correction, Friday and Monday’s relief rally helped the S&P 500 recover some ground. However, the Nasdaq remains firmly in correction mode, defined as a 10 percent drop from a recent peak, and all three major indices remain negative for the year, reflecting the extent of the market’s pullback.

While tariff-related developments from the White House remain a key concern, market attention is shifting towards the Federal Open Market Committee’s rate decision and economic projections.

Traders will closely monitor the Fed’s interest rate announcement and subsequent press conference with Chair Jerome Powell. Market expectations overwhelmingly point to rates remaining unchanged at 4.25 to 4.50 percent, with CME FedWatch data indicating a 99 percent probability of a hold.

While the decision aligns with the Fed’s cautious stance amid uncertainty surrounding Trump’s tariff policies and their economic fallout, the central bank’s updated economic projections, commonly known as the dot plot, will take centrestage. Investors will scrutinise the dot plot for any shifts in policymakers’ interest rate expectations.

The December dot plot suggested fewer rate cuts than markets had hoped for in 2025. Any adjustments to this outlook will be critical for investors seeking clarity on the Fed’s policy trajectory.

Among individual stocks, Tesla, one of the hardest-hit names during the market’s recent downturn, continued to slide. The stock fell 5 percent on Tuesday after RBC Capital Markets slashed its price target, citing mounting competition in the electric vehicle sector. Tesla has now plunged 36 percent over the past month, extending its steep losses.

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