NEW YORK, New York - Tech stocks led a downturn on U.S. stock markets on Tuesday as majors including Nvidia fell sharply. "The AI trade may not be breaking but it could be catching its breath. After a 40+ percent run for the NASDAQ since April, historically a pause is normal as the market recalibrates around the latest economic data and anticipated Fed policy," Jayson Bronchetti, chief investment officer at Lincoln Financial. told CNBC Tuesday.

"As capital shifts toward companies across more sectors who demonstrate an ability to apply AI to boost margins and efficiency, potential rotation and wider participation may underpin a more durable advance, though near-term chop is likely," Bronchetti added.

The NASDAQ Composite suffered the steepest drop among major U.S. indexes, falling 314.82 points, or 1.46 percent, to close at 21,314.95. The loss reflects growing investor caution around high-valuation technology stocks amid renewed concerns over interest rates and earnings growth in the sector.

The Standard and Poor's 500, a broader gauge of the U.S. market, declined 37.78 points, finishing the session at 6,411.37 — a loss of 0.59 percent. Weakness in key growth sectors, including information technology and consumer discretionary, weighed heavily on the index.

Dow Holds Steady Despite Market Pressure

The Dow Jones Industrial Average was the lone major U.S. index to end in positive territory, edging up 10.45 points to close at 44,922.27, a marginal gain of 0.02 percent. Gains in industrial and healthcare stocks helped offset broader market weakness, giving the blue-chip index just enough momentum to avoid a negative close.

Investors are now turning their attention to upcoming economic data releases and central bank commentary for further clues on inflation trends and the interest rate outlook. Trading volumes remained solid across the board, particularly on the NASDAQ, which recorded over 7.4 billion shares in volume.

U.S. Dollar Edges Higher Tuesday: Euro and Pound Slip, Canadian Dollar Weakens Sharply

The U.S. dollar delivered a diverged performance on Tuesday in global foreign exchange markets, strengthening notably against the Canadian, Australian, and New Zealand dollars while edging lower against the yen. Major European currencies, including the euro and the British pound, lost ground.

Euro and Pound Weaken Against the Dollar

The euro slipped 0.11 percent against the US dollar, ending the day at 1.1647. The British pound also moved slightly lower, down 0.09 percent, to finish at 1.3489. Both currencies have been under pressure amid ongoing economic uncertainty in the Eurozone and cautious outlooks from the Bank of England and the European Central Bank.

Dollar Rises Against Canadian, Australian, and Kiwi Currencies

The U.S. dollar posted its strongest gain of the day against the Canadian dollar, climbing 0.46 percent to 1.3865. Weakness in oil prices and softening Canadian economic indicators contributed to the loonie's decline.

The Australian dollar dropped 0.58 percent to 0.6452 against its U.S. counterpart, while the New Zealand dollar fell 0.45 percent to 0.5895. Both currencies were weighed down by risk-off sentiment and concerns over slowing global trade.

Yen Gains Slightly as Safe-Haven Appeal Returns

In Asia, the Japanese yen firmed modestly against the greenback. The dollar declined 0.21 percent against the yen, settling at 147.55. The move reflected a slight uptick in safe-haven demand amid mixed equity market performance and geopolitical caution.

Swiss Franc Steady

The Swiss franc was little changed, with the U.S. dollar inching up just 0.05 percent to 0.8076. 

Global Markets see European Stocks Climb while Canada, Asia and Pacific Struggle

Global stock markets delivered a mixed performance on Tuesday, with European indices largely advancing while many Asian-Pacific markets ended the session lower.

Canada's TSX Retreats on Commodity Weakness

North of the U.S. border, Canada's S&P/TSX Composite Index lost ground, slipping 98.97 points to 27,823.88, a decline of 0.35 percent. Resource-linked sectors, particularly energy and materials, dragged the index lower as commodity prices softened amid global demand concerns.

UK and Europe Gains Ground

In the UK and Europe, stocks rallied across major indices. London's FTSE 100 rose by 31.48 points to close at 9,189.22, marking a gain of 0.34 percent. In Germany, the DAX Performance Index added 108.30 points to reach 24,423.07, up 0.45 percent. France's CAC 40 surged 1.21 percent, or 95.03 points, finishing at 7,979.08.

The EURO STOXX 50 also posted a strong performance, gaining 48.64 points to settle at 5,483.28, an increase of 0.89 percent. The Euronext 100 Index rose by 12.53 points to 1,622.14, up 0.78 percent. Meanwhile, the BEL 20 in Brussels was the exception in the region, falling 12.66 points or 0.26 percent to 4,795.71.

Asia and Pacific Retreat

Asian markets mostly declined. Hong Kong's Hang Seng Index lost 53.95 points to close at 25,122.90, down 0.21 percent. South Korea's KOSPI Composite Index dropped 25.72 points, or 0.81 percent, to 3,151.56. Taiwan's TWSE Index was also under pressure, falling 129.02 points to 24,353.50, a decline of 0.53 percent.

China's Shanghai Composite Index remained relatively flat, slipping just 0.74 points to 3,727.29, a marginal decrease of 0.02 percent.

In Australia, the S&P/ASX 200 fell 63.10 points, or 0.70 percent, closing at 8,896.20, while the broader All Ordinaries slipped 59.70 points to 9,173.80, down 0.65 percent.

Japan's Nikkei 225 dropped 168.02 points, ending at 43,546.29, a loss of 0.38 percent. The IDX Composite in Indonesia declined by 35.43 points to 7,862.95, down 0.45 percent. New Zealand's S&P/NZX 50 Index lost 41.96 points, or 0.32 percent, to close at 12,928.68.

India's S&P BSE Sensex posted a solid gain of 370.64 points to reach 81,644.39, up 0.46 percent. Singapore's STI Index rose by 28.81 points, or 0.69 percent, finishing at 4,216.19. In Malaysia, the FTSE Bursa Malaysia KLCI edged up 5.28 points to 1,590.24, an increase of 0.33 percent.

Strong Performances in Middle East

Israel's benchmark index climbed 19.87 points, or 0.65 percent, to close at 3,069.94. Egypt's EGX 30 gained 275.30 points, closing at 36,100.10, up 0.77 percent.

South Africa's Top 40 Index fell slightly by 2.69 points to 5,700.45, down 0.05 percent.

Despite strength in Europe, broader global sentiment appeared tentative amid ongoing concerns about economic growth in Asia and subdued trading volumes in some markets.

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