(CNN) – The Dow Jones industrial average fell to Tuesday's session with Federal Reserve Chairman Jerome Powell pointing to economic uncertainties such as trade and emphasizing central bank independence.
The Dow Jones Index fell as much as 0.5 percent, but rebounded 0.3 percent, or 90 points. The S & P 500 fell 0.6% and the Nasdaq Composite fell 1%. The closing of the Dow record remains in sight just a day after it gets closer and closer to its all-time high close.
Powell appeared to react to President Donald Trump's attacks on central banks during the Foreign Relations speech, saying that "the Fed is isolated from short-term political pressures."
On economic pressures, Powell said cross-currents for the global economy – such as concerns about trade and growth – have resurfaced and may appear in the economic data that arrives. However, Powell said that monetary policy should not react to any single data, as this would add further uncertainty.
The central bank is expected to cut interest rates next month to boost the US economy. Lower interest rates are business-friendly and can take actions to a higher level.
Inventories began all day as global inventories were weaker in the face of growing geopolitical tensions. Asian markets closed lower and European stock markets also ended weaker.
In addition to monetary policy, two other topics are in the minds of investors: geopolitical and commercial.
Tensions between the United States and Iran escalated after President Donald Trump charged new sanctions on Monday. Iran toppled an American drone in international airspace last week, sparking the latest fighting between Washington and Tehran.
Although riskier investments, including stocks, are suffering in this environment, asset-safe assets such as gold continue to rise. A weaker US dollar also helps the precious metal. Gold prices rose 1.1% to $ 1,429.70 an ounce on Tuesday, according to Refinitiv.
Investors are still eagerly awaiting the meeting between Trump and Chinese President Xi Jinping at the G-20 summit this week in Japan, which could herald the next phase of trade talks.
If trade talks between the United States and China fell, "this would immediately increase the risk of a global slowdown and could lead to sharp declines in stock prices," said Fawad Razaqzada, technical analyst at FOREX.com. However, this is not the basic case of Razaqzada.
He believes a full trade agreement remains highly unlikely, but leaders in both countries are likely to pledge to resume talks in July.
"That would be seen as a positive outcome," he wrote, especially if accompanied by a reduction in tariffs – or at least a delay in imposing new tariffs on $ 300 billion worth of Chinese goods, as the Trump administration is considering.