Global financial markets tumbled on Tuesday as escalating Israeli airstrikes on Gaza heightened geopolitical tensions, triggering a selloff on Wall Street and driving gold prices to record highs. The downturn coincided with the U.S. Federal Reserve’s critical monetary policy meeting, adding to economic uncertainty.
Middle East Tensions Fuel Market Decline
According to Reuters, the latest wave of Israeli missile attacks resulted in over 400 casualties in Gaza, exacerbating tensions in the region. The conflict also overshadowed a diplomatic call between U.S. President Donald Trump and Russian President Vladimir Putin, where both leaders discussed potential resolutions for Russia’s ongoing war in Ukraine.
In response to the heightened instability, all three major U.S. stock indexes turned negative:
The Dow Jones Industrial Average fell 334.15 points (0.80%) to 41,505.78.
The S&P 500 dropped 68.53 points (1.21%) to 5,606.59.
The Nasdaq Composite plunged 313.10 points (1.76%) to 17,496.33, weighed down by losses in technology megacap stocks.
“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.
Federal Reserve Meeting Adds to Uncertainty
Adding to market volatility, the Federal Reserve’s two-day meeting is expected to conclude with interest rates remaining unchanged. However, investors remain wary of the central bank’s stance on inflation and economic policy, particularly amid uncertainty surrounding Trump administration 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.”
European Markets React Differently
Despite the broader market downturn, European stocks showed resilience, driven by economic developments in Germany. The German parliament approved a major government spending overhaul, causing fluctuations in the euro but ultimately boosting German shares close to record highs.
