US stock futures sank on Thursday, pulling back after the major indexes staged a historic rally amid concerns that President Trump’s broad trade offensive has become a direct confrontation with China.
S&P 500 futures (ES=F) dropped 2%, while those on the tech-heavy Nasdaq 100 (NQ=F) tumbled 2.2%. Dow Jones Industrial Average futures (YM=F) fell 1.5%, or around 600 points.
Markets on Wednesday breathed a loud, collective sigh of relief after Trump paused many of the largest US tariff hikes on trading partners, with stocks notching one of their biggest one-day rallies since World War II.
But now Wall Street is weighing Trump’s remarkable escalation in the US trade battle with China, after he raised levies on imports from the country to a whopping 125%. That hike came after Beijing raised its tariff on US goods to 84% in retaliation to an earlier hike.
As of 6:14:55 AM EDT. Market Open.
ES=F YM=F NQ=F
“The trade war is now turning into a direct confrontation between the US and China … we could again be seeing escalation and de-escalation at the same time, pulling markets in different directions,” Rabobank analysts said.
And though a wider trade war is on hiatus, risks remain to the health of the US economy, and Trump’s move is “merely the end of the beginning,” according to JP Morgan.
Other parts of the president’s trade-policy overhaul are still in effect, including a 10% baseline tariff on most trading partners, 25% duties on steel and aluminum imports, and 25% duties on auto imports. Those elements could still lead to consequences analysts have warned about, such as rising prices and slower economic growth.
Read more: Live updates on Trump tariffs fallout
Investors on Thursday will get a snapshot of largely pre-tariff inflation with the release of March’s Consumer Price Index. A weekly reading on jobless claims will provide a more timely picture of the labor market, as several Fed officials step up to speak during the day.
LIVE 3 updates
