Financial Markets                      03/18 15:34

   

   NEW YORK (AP) -- Wall Street swung back down on Tuesday, and its former 
superstars once again led the way.

   The S&P 500 dropped 1.1% for its latest swerve in a scary ride, where it 
tumbled by 10% from its record and then rallied for two straight days. The Dow 
Jones Industrial Average fell 260 points, or 0.6%, and the Nasdaq composite 
sank 1.7%.

   Tesla was one of the heaviest weights on the market after falling 5.3%. The 
electric-vehicle maker's stock has been struggling on worries that it will lose 
sales because of anger at its CEO, Elon Musk, who has been leading efforts to 
cut spending by the U.S. government. EV rivals, meanwhile, continue to chip 
away at its business. China's BYD on Monday announced an ultra-fast charging 
system that it says is nearly as quick as a gasoline fill-up.

   Alphabet sank 2.2% after the owner of Google said it would buy cybersecurity 
firm Wiz for $32 billion. It would be the company's most expensive purchase in 
its 26-year history, and it could boost the tech giant's in-house cloud 
computing amid burgeoning artificial-intelligence growth.

   The drop for Big Tech continues a trend that's taken hold in the market's 
recent sell-off: Stocks whose momentum had earlier seemed unstoppable have 
since dropped sharply following criticism they had simply grown too expensive.

   Chief among them have been stocks that zoomed higher in the frenzy around AI 
technology. Nvidia fell 3.3% as it hosted an event known as "AI Woodstock." 
Super Micro Computer, which makes servers, lost 9.6%. Palantir Technologies, 
which offers an AI platform for customers, sank 4%.

   They've been among the biggest losers as Wall Street retrenches amid 
uncertainty about what President Donald Trump's trade war will do to the 
economy. Trump's rat -a- tat announcements on tariffs and other policies have 
created worries that U.S. households and businesses could hold pull on their 
spending, which would hurt the economy.

   It all makes things more complicated for the Federal Reserve, which is 
beginning its latest meeting on interest-rate policy and will make its 
announcement on Wednesday.

   The Fed could lower its main interest rate, which would make it easier for 
U.S. businesses and households to borrow. That in turn could boost the economy. 
But lower interest rates can also push inflation upward, and U.S. consumers 
have already begun bracing for higher inflation because of tariffs.

   Virtually everyone on Wall Street expects the Fed to hold its main interest 
rate steady on Wednesday, as it waits for clues about how conditions play out. 
The job market, for the moment at least, appears relatively stable after the 
economy closed last year running at a solid rate.

   More attention will be on the forecasts the Fed will publish after the 
meeting, showing where officials expect interest rates, inflation and the 
economy to head in upcoming years. For now, traders on Wall Street are largely 
expecting the Fed to deliver two or three cuts to rates by the end of 2025.

   One of the reasons the U.S. stock market's sell-off in recent weeks has "so 
far been orderly," with the epicenter remaining within tech, may be because of 
faith that the Fed can protect Wall Street, according to strategists at 
Barclays. If conditions were to deteriorate quickly, the Fed could cut rates to 
support the economy.

   Such faith "crucially could be put to test this week" if the Fed appears to 
be more concerned about inflation than a weakening economy, at least relative 
to the market's expectations, according to the Barclays strategists led by Venu 
Krishna.

   All told, the S&P 500 fell 60.46 points to 5,614.66 Tuesday. The Dow Jones 
Industrial Average dropped 260.32 to 41,581.31, and the Nasdaq composite fell 
304.55 to 17,504.12.

   In stock markets abroad, indexes rose across much of Europe and Asia. 
They've been largely doing better than the U.S. stock market this year, 
flipping a yearslong trend and forcing questions about whether the end has 
arrived for what was called "U.S. exceptionalism."

   Japan's Nikkei 225 rose 1.2%. Investors expect the Bank of Japan to keep its 
benchmark interest rate unchanged at a monetary policy board meeting due to 
wrap up Wednesday.

   Trading on Indonesia's stock exchange was suspended temporarily as the 
benchmark JSX tumbled as much as 6%. But it later pared the loss to 3.8%.

   Investors have been sending shares of state-owned banks lower after the 
government launched a sovereign wealth fund, called Danantara, that so far has 
not proven popular. Worries over U.S. tariffs and other risks have also shaken 
confidence in the economy of the world's fourth-most populous nation, said Budi 
Frensidy, a professor at the University of Indonesia.

   In the bond market, the yield on the 10-year U.S. Treasury note fell to 
4.28% from 4.31% late Monday.

   ___

   AP writers Matt Ott, Yuri Kageyama and Niniek Karmini contributed to this 
report.

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