The S&P 500 closed lower Tuesday as investors assessed a lack of updates on U.S.-China trade progress and awaited the Federal Reserve rate decision due Wednesday.  

At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average dropped 397 points, or 1%, the S&P 500 index slipped 0.8%, and the NASDAQ Composite fell 0.9%. 

Trump says China willing to negotiate on trade, but stops shorts of signalling progress

President Donald Trump said China wanted to negotiate a trade deal to end the current trade war, but stopped short of signalling urgency to resolve the conflict, saying the U.S. and China would meet the right time.

Markets had briefly cut some losses on hopes of a major announcement on trade after Trump touted he would have "very, very big announcement to make," ahead of his administration’s trip to the Middle East. But the reprieve was short lived after Trump said the big announcement may "not necessarily" be on any trade-related development. 

Fed meeting looms large

The Fed kicks off its two-day meeting Tuesday, with the central bank expected to hold interest rates steady when it concludes on Wednesday.

Fed Chair Jerome Powell recently signalled that the policymakers are in a wait-and-see mode amid tariff concerns. This comes despite overt pressure from President Trump and Treasury Secretary Scott Bessent to cut policy rates.

Given the decision is largely seen as a forgone conclusion, the focus will be on comments from Powell to get insights into the Fed’s future rate path.

A reading of activity in the key U.S. services sector, which accounts for more than two-thirds of the economy’s output, was stronger than anticipated, signaling that businesses may be able to shrug off headwinds from the tariffs. Still, a metric of prices paid by services companies rose, adding to worries that the duties could fuel inflationary pressures.

The U.S. goods and services deficit widened in March following an uptick in imports as businesses raced to lock in prices before the implementation of elevated tariffs.

Adjusted for seasonality but not price changes, the trade gap rose by 14.0% to $140.5 billion from a downwardly-revised $123.2 billion in February, according to data from the Commerce Department’s Bureau of Economic Analysis on Tuesday.

Corporate results continue

There have been a number of corporations releasing quarterly earnings Tuesday, as the first-quarter results season continued.

Ford (NYSE:F) stock rose more than 2% even as the auto giant slashed its full-year guidance, noting uncertainty around the outlook due to Trump’s tariffs.

Palantir Technologies (NASDAQ:PLTR) stock slumped about 12% after the artificial intelligence-focused data firm reported quarterly numbers that disappointed heightened market expectation, even as it lifted its annual sales guidance.

Tesla (NASDAQ:TSLA) stock fell more than1% after the EV manufacturer saw a significant drop in its sales volume in Germany in April, while new car sales in the United Kingdom dropped by 62% year-on-year, hitting their lowest point in over two years.

DoorDash (NASDAQ:DASH) stock fell more than 7% after the food delivery company’s first-quarter revenue fell short of estimates, while also confirming it has made a formal offer to acquire U.K. rival Deliveroo (LON:ROO).

Mattel (NASDAQ:MAT) stock added more than 2% despite the toymaker pausing its 2025 full-year guidance due to tariff uncertainty. The paused on guidance came as the company reported quarterly results that were better than feared.

(Peter Nurse, Ayushman Ojha contributed to his article.)