(CNN) - The Dow and the S&P 500 had their worst day in nearly a month on Tuesday as stocks dropped across the board.
The Dow finished 0.7%, or 179 points, lower, while the S&P 500 closed 0.9% lower. It was the worst one-day percentage drop for both benchmarks since May 31, according to Refinitiv. The Nasdaq Composite finished down 1.5%, recording its worst day since June 3.
Three topics kept investors busy: monetary policy, geopolitics and trade.
Federal Reserve Chairman Jerome Powell spoke at the Council of Foreign Relations in the afternoon, saying the central bank was "grappling" with the uncertainties in the US economy. He also said it was important that monetary policy didn't overreact to any single data points, as that would create even more uncertainty.
While an interest rate cut is expected at next month's Fed meeting, Powell's comments seemed to suggest that the central banks isn't so sure yet. Lower interest rates are favorable to companies and can lead equities higher.
Powell also appeared to hit back at President Donald Trump's attacks on the central banks during the speech at the Council of Foreign Relations, saying the "Fed is insulated from short-term political pressures."
Global stocks were weaker in the face of escalating geopolitical tensions. Asian markets closed lower and European exchanges mostly ended weaker as well.
Tensions between the United States and Iran escalated after President Donald Trump levied new sanctions on Monday. Iran shot down a US drone in international airspace last week, prompting the latest altercation between Washington and Tehran.
Although riskier investments including stocks are suffering in this environment, safe-haven assets like gold continue to climb higher. A weaker US dollar also helps the precious metal, which is hovering around a six-year high. Gold futures settled flat at $1,414.90, according to CME data, after rising more than 1% during the trading day.
Investors are still anxiously awaiting the meeting between Trump and China's President Xi Jinping at the G20 summit in Japan this week, which could herald the next phase of trade negotiations.
If trade talks between the United States and China fell apart, "it would immediately raise the risk of a global slowdown and may lead to sharp falls in equity prices," said Fawad Razaqzada, technical analyst at FOREX.com. However, that's not Razaqzada's base case.
He believes a full trade agreement remains highly unlikely, but the leaders of both countries will probably make a commitment to resume talks in July.
"This would be seen as a positive outcome," he wrote, especially if it's accompanied by a reduction of the tariffs — or at least a delay imposing new tariffs on $300 billion worth of Chinese goods, as the Trump administration is considering.
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