U.S. markets opened on a cautious note Tuesday, with major indices trending lower as investors reacted to rising volatility and renewed uncertainty around the global economic outlook. The downturn, led by losses in technology and blue-chip stocks, follows a string of mixed corporate updates and lingering concerns over interest-rate trajectories in key economies.

The S&P 500 fell 0.83% to 6,617.32, extending the prior session’s weakness as traders continued to reduce exposure to high-valuation sectors. The Nasdaq Composite slipped 1.21% to 22,432.85, marking its third consecutive day of declines, while the Dow Jones Industrial Average dropped 1.07% to 46,091.74, weighed down by industrial and consumer discretionary stocks.

Market analysts noted that investor sentiment remains fragile amid rising volatility and geopolitical headwinds. The CBOE Volatility Index (VIX) surged 10.32% to 24.69, reaching its highest level in several weeks. The uptick in the so-called “fear gauge” reflects mounting investor unease as traders hedge positions ahead of key inflation and employment data expected later in the week.

Tech and Blue-Chip Weakness Weighs on Major Indices

Technology and growth-oriented sectors led the market’s early declines, with heavy selling in semiconductor and software stocks. Analysts attributed the weakness to a combination of profit-taking and renewed worries about corporate margins as inflation pressures linger. The tech downturn has also been compounded by weaker guidance from major U.S. firms, signaling potential earnings headwinds going into the final quarter of the year.

The Dow 30 was hit particularly hard by a pullback in industrial and manufacturing names, sectors that have been sensitive to shifts in global supply-chain sentiment. Meanwhile, defensive sectors such as healthcare and utilities showed relative strength, underscoring the market’s rotation into safer assets.

Regional Markets and Currency Movements

Across the Americas, the market tone remained subdued. Canada’s S&P/TSX Composite Index dipped 0.13% to 30,036.46, as energy and mining stocks slipped in response to softer commodity prices. In Brazil, the IBOVESPA edged 0.30% lower to 156,522.12, reflecting weak momentum in banking and consumer sectors.

Currency markets were largely stable, with the U.S. Dollar Index (DXY) inching up 0.01% to 99.60, signaling limited movement ahead of upcoming macroeconomic releases. The dollar’s steadiness provided little relief to equities, as investors prioritized risk reduction amid tightening global liquidity conditions.

Small Caps Offer a Glimmer of Positivity

One bright spot in early trading came from smaller companies. The Russell 2000 index rose 0.31% to 2,348.74, suggesting selective investor interest in domestically oriented businesses less exposed to global volatility. Analysts said that the resilience of small caps reflects expectations of relative strength in the U.S. consumer economy and local investment activity.

Still, the gains in smaller stocks were not enough to offset broader selling pressure across large-cap indices. Market strategists expect volatility to remain elevated through the week as investors navigate earnings updates, policy commentary, and upcoming inflation data.