U.S. stock index futures experienced a decline on Wednesday, as investors adopted a cautious stance in anticipation of the forthcoming implementation of President Donald Trump’s trade tariffs. As of 04:30 ET (09:30 GMT), Dow Jones Futures experienced a decline of 120 points, equating to a 0.3% decrease. Similarly, S&P 500 Futures fell by 20 points, or 0.4%, while Nasdaq 100 Futures saw a reduction of 90 points, representing a 0.5% drop. On Tuesday, the S&P 500 experienced an increase of 0.4%, while the NASDAQ Composite saw a rise of 0.9%. In contrast, the Dow Jones Industrial Average remained relatively stable, as investors exhibited caution in their engagement prior to Wednesday’s forthcoming announcement.
The impending tariffs proposed by Trump are a significant consideration.
The administration under President Trump is set to introduce reciprocal tariffs targeting a broad spectrum of trading partners, effective April 2, as announced by White House press secretary Karoline Leavitt on Tuesday. Trump is anticipated to reveal the specifics of the administration’s reciprocal tariffs at 3:00 p.m. ET. He has positioned tariffs as a central element of his second term, contending that such measures are essential for rectifying trade imbalances, enhancing government revenues, and restoring manufacturing jobs that have been lost. Nevertheless, ambiguity regarding the precise extent of retaliatory actions from impacted countries has maintained a state of unease among investors. “Analysts at UBS noted that the proposals are anticipated to serve primarily as a starting point, concentrating on approximately 15-20 key trade partners, which account for 75% of imports, or the somewhat larger group identified by the USTR in the Federal Register, encompassing 88% of trade.”
In conclusion, the prevailing expectation is that the United States will implement an average tariff of 15% on its 15 largest trading partners, in addition to a 25% tariff specifically targeting China, as well as elevated rates on certain categories such as automobiles, steel, and aluminum. This suggests a potential imposition of tariffs amounting to $600-650 billion, representing an increase approximately five times greater than the tariff hikes observed during the 2018-2019 period.
Upcoming release of ADP employment figures
The anticipated tariffs have introduced uncertainty into the U.S. economic forecast, prompting investors to closely analyze the most recent private sector employment figures, particularly in advance of the highly scrutinized official jobs report scheduled for Friday. The February report from the Job Openings and Labor Turnover Survey (JOLTS), published on Tuesday, indicated a modest decrease in job openings, falling to 7.57 million from the revised figure of 7.76 million in January. This decline indicates a slow moderation in the labor market in the context of increasing economic uncertainties. Furthermore, the Institute for Supply Management (ISM) indicated that its Manufacturing Purchasing Managers’ Index (PMI) declined to 49.0 in March, down from 50.3 in February, signifying the initial contraction in the manufacturing sector for the year.
Tesla is expected to experience a decrease in deliveries. Tesla is poised to unveil its first-quarter car delivery figures later on Wednesday, with analysts forecasting a notable decrease in sales attributed to CEO Elon Musk’s political controversies, a deceleration in the electric vehicle market, and intensifying competition. Tesla’s stock experienced a decline in premarket trading, reflecting a significant drop of over 30% in the first quarter, which has resulted in the loss of approximately $460 billion in market capitalization.
Crude prices decline in anticipation of OPEC+ decisions. Crude oil prices experienced a modest decline on Wednesday, reflecting a sense of caution ahead of Trump’s impending tariff announcement later in the day. Market participants are closely monitoring an upcoming meeting of the Organization of the Petroleum Exporting Countries and its allies, collectively referred to as OPEC+, scheduled for later this week. Reports indicate that the oil consortium is contemplating strategies to further augment production levels. Crude prices experienced a modest uptick in the past week, following President Trump’s threats of additional oil sanctions against Russia and potential military action against Iran concerning its nuclear agreement.