The 10-year US Treasury yields fell to 3.954%, with investors pricing in a chance of a fifth interest-rate cut from the Federal Reserve (Fed) this year.
S&P 500 futures plunged more than 20% from their peak, suggesting the benchmark index is heading toward bear market territory.
If the index ends down 20% from its all-time closing highs, it would confirm the index has been in a bear market since February.
Dow futures also fell 20% from their peak.
Trump announced hefty tariffs against US trading partners last week, sparking retaliation from China and fueling concerns that the trade war will impede economic growth and stoke inflationary pressures.
In the two sessions after Trump’s tariff decision, the S&P 500 has tumbled 10.5%, erasing nearly $5 trillion in market value, marking its most significant two-day loss since March 2020.
Trump told reporters late yesterday that investors must endure the consequences and that he would refrain from negotiating with China until the US trade deficit is addressed.
“People are pulling out and holding it in cash and are going to be sitting on it for a little bit,” Daniela Hathorn, senior market analyst at Capital.com, said.
“They’ll be assessing what’s going on before hedging, because everything is dropping. This sticky environment doesn’t seem like it can recover anytime,” Hathorn said.
By 6.22am, US S&P 500 E-minis were down 115.25 points, or 2.26%, Nasdaq 100 E-minis were down 411 points, or 2.34%, Dow E-minis were down 916 points, or 2.38%.
Futures tracking the US small-cap Russell 2000 index tumbled 4.5%, underscoring concerns about the health of the domestic economy.
The CBOE Volatility Index, seen as Wall Street’s fear gauge, was up 7.57 points to 52.88.
Stocks fell across the board in premarket trade, with megacaps continuing to bear the brunt.
Apple fell 2.5%, Nvidia lost 2.7%, while Amazon.com shed 2.4%.
Howmet Aerospace dropped 6.5%, after a report said the aircraft parts supplier may halt some shipments if they are impacted by Trump’s tariffs.
The sharp declines in the past two sessions pushed the tech-heavy Nasdaq into bear market, while the Dow Jones Industrial Average slumped more than 10% from its record-closing high.
The fear of a tariff-led recession caused markets to bring into play the chances of an interest-rate cut in May, with traders seeing a 54% possibility, according to data compiled by LSEG.
Goldman Sachs raised the odds of a US recession to 45% from 35%, the second time it has increased its forecast in a week amid a growing chorus of such predictions by investment banks due to an escalating trade war.
Several speeches by Fed officials are slated throughout the week, with markets keenly observing any signals of recessionary fears.
The week ahead is also packed with a series of economic indicators, with consumer price data set to take center stage on Thursday.