As America opened trading on Sunday the US stock futures dived. This move signals continuation of the huge sell — off that USA had last two days of trade. This markdown comes after the Trump administration announced tariffs earlier this month.
Investors are getting ready for a round of volatility in the markets this week, as the rest of the world deals with this new round of border tariffs that are perceived to be tougher than anticipated.
The S&P 500 index E-mini futures fell 4% in early Sunday trade. Similarly, the Dow E-minis dropped 3.8% while the Nasdaq 100 E-minis sank 4.6 % lower.
The benchmark S&P 500 index fell 10.5% over the two days following the announcement of the tariffs on Wednesday. This drop fell in line with approximately $5 trillion in total market capitalisation vanishing. The two-day fall was the sharpest since March 2020. The S&P 500 closed at more than 17% below its February 19 close at the last record high, after its big losses on Thursday and Friday; this takes the S&P closer to the widely used bear market measure — a decline of 20% or more.
That’s behind us, according to Siebert Financial chief investment officer Mark Malek, prior to the opening in futures trading. While he indicated there would eventually be some gains, he expressed that he didn’t think they would be permanent.
And the tariffs aren’t the only aspect of a sour looking horizon, however the timing of this news is seen as adding to it at the beginning of the first from the earnings season.
Sunday morning there were some appearances on TV by some of Trump’s top economic advisors defending the move, saying the tariffs were “strategic” and “calculated.” Scott Bessent, U.S Treasury Secretary told NBC News’ “Meet the Press” that there was “no reason” for an economic recession to happen.
Alternatively, some trader predicts that a bounce in stock is almost inevitable. An up day was “inevitable at some point this week,” said Interactive Brokers chief investment strategist Steve Sosnick.
Whether any such recovery will be sustainable is another matter. A rally that extends over more than a day or two is unlikely to form for another three to four weeks although some positive trade days can be expected this week, said Alex Morris, chief investment officer of F/m Investments. At that point the feeling might be that enough had been corrected out of the market, he added.
To the world posting US tariffs:
The reaction is widespread in global financial markets after the announcement of tariffs by the US. That news then sent a number of Asian stock markets plunging. European markets are seen opening softer as the burden these tariffs will have on global trade and growth weighs on sentiment.
And fears of a trade war have spread, as other countries are set to impose tariffs on US. products. Could turn the markets even more bearish and may further hinder global economic activity.
Consequences on Key Economic Metrics
The paths of some economic indicators might have a few specific effects if the tariffs are put in place. The implication is higher inflation as these tariffs come into effect the cost of imports will be impacted. That might cause consumers to taper off with the spending, in turn pushing the economy to a plateau growth.
Moreover, the tariffs can also influence corporate earnings, especially for corporations that rely on global commerce or the importing of components. Increased costs and disrupted supply chains could squeeze profit margins — and, by extension, stock prices.
The How will also all eyes will be on the feed. And if the tariffs show up as a meaningful headwind on the economy, the central bank will be forced to adjust monetary policy, through interest rate cuts, to try to mitigate some of the harm.
Impact on Different Sectors and What it Means for Investors
The tariff can also affect a specific portion of the economy differently. This could cripple some sectors with strong dependence upon imported raw material or with international destination markets. However, domestic firms in the same industry as imports might gain from having less foreign competition.
Investors must have been in a bullish mood before the tariff announcement, since the news would have turned them cautious. Increased risk aversion due to uncertainty over global trade and prospects for disruption to economic activity. It’s visible in flows from equities into safer assets such as government bonds.
These next few weeks will be crucial in terms of determining the final impact of the US tariffs and what border nation have carried out in response. The speed of the trade talks and broad economic conditions will determine whether any market rebound has legs.
