U.S. Stock Futures Drop Sharply Following Trump's Tariff Imposition on Trade Partners
Futures for the Dow Jones, S&P 500, and Nasdaq experience significant declines as tariffs threaten economic growth.
NEW YORK — U.S. stock futures plunged Sunday night as markets opened the new trading month, reacting to the imposition of new tariffs on goods from key U.S. trading partners and the potential economic fallout.
Futures tied to the Dow Jones Industrial Average dropped by 463 points, or 1%. S&P 500 futures fell 1.6%, while Nasdaq-100 futures lost 2.1%, signaling a tumultuous start to the week for investors.
On Saturday, President Donald Trump announced the implementation of a 25% tariff on goods imported from Mexico and Canada, along with a 10% levy on imports from China. The move targets the U.S.’s substantial $1.6 trillion trade relationship with these countries, raising concerns over escalating trade tensions and its effect on the global economy.
In response, Canada imposed its own retaliatory tariffs, and Mexico threatened to explore similar measures on U.S. imports. Meanwhile, China stated its intent to file a lawsuit with the World Trade Organization, seeking resolution for the new trade restrictions.
“Markets may need to take Trump’s tariff actions more seriously now, rather than just as a negotiating tactic,” warned Tobin Marcus, head of U.S. policy and politics at Wolfe Research. “If investors start pricing in this new level of risk, Monday could bring a significant market downturn.”
Following the tariff announcement, oil and gasoline futures saw a rise, and the U.S. dollar strengthened against other currencies.
In addition to tariff concerns, traders are looking ahead to the busiest week for fourth-quarter earnings reports. More than 120 companies in the S&P 500 are expected to announce their results, including major tech companies like Alphabet, Amazon, and Palantir, as well as consumer industry giants such as Walt Disney and Mondelez. These earnings reports are anticipated to offer insights into the health of the economy amid increasing concerns over trade issues and the performance of artificial intelligence stocks.
Investors will also be monitoring the January nonfarm payrolls report, due out on Friday, to gauge the health of the labor market. Economists surveyed by Dow Jones are expecting the addition of 175,000 jobs, with the unemployment rate predicted to hold steady at 4.1%.
Despite recent volatility, U.S. stocks ended the month of January on a positive note. The S&P 500 gained 2.7%, and the tech-heavy Nasdaq Composite rose 1.6%. The Dow Jones Industrial Average outperformed, climbing 4.7% for the month. However, as tariffs loom large, traders are bracing for another turbulent period.