Tesla was one of the heaviest weights on the market after falling 6%. The electric-vehicle maker's stock has been struggling on worries that its brand has become too intertwined with Elon Musk, who has been leading efforts to cut spending by the U.S. government. EV rivals, meanwhile, continue to chip away at its sales. China's BYD on Monday announced an ultra fast EV charging system that it says is nearly as quick as a gasoline fill-up.
Alphabet sank 4.2% 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 25-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 after criticism built that they had simply become too expensive.
Chief among them have been stocks that zoomed higher in the frenzy around AI technology. Nvidia fell 3.6%. Super Micro Computer, which makes servers, lost 5.6%. Palantir Technologies, which offers an AI platform for customers, sank 4.9%.
These stocks have 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 economists worried that U.S. households and businesses could hold back on spending, which would hurt the economy.
It all makes the calculus different 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, which in turn could boost the economy. But lower interest rates can also push up inflation, and U.S. consumers have already been bracing for higher inflation because of tariffs.
Virtually everyone on Wall Street expects the Fed to hold its main interest rate steady on Wednesday. More attention will be on the forecasts it 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 through the end of this year.
In stock markets abroad, indexes rose across much of Europe and Asia.
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 bounced back a bit, falling 3.8%.
Investors have been selling shares in state-owned banks after the government launched a sovereign wealth fund, called Danantara, that so far has not proven popular. Worries over tariff increases and other risks have also shaken confidence in the economy, said Budi Frensidy, a professor at the University of Indonesia.
In the bond market, the yield on the 10-year Treasury edged down to 4.30% from 4.31% late Monday.
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AP writers Matt Ott, Yuri Kageyama and Niniek Karmini contributed to this report.