Wall Street jumped for a second consecutive session yesterday on signs the White House was open to reducing sweeping tariffs on China, and after President Donald Trump stepped back from his attacks on Federal Reserve (Fed) chairman Jerome Powell.
However, treasury secretary Scott Bessent said a move to reduce levies would not come unilaterally.
In response, China said that the US should lift all unilateral tariff measures.
Yesterday, the Trump administration said in a Federal Register post that it had launched a probe into whether imports of medium- and heavy-duty trucks and parts for them pose a national security risk, a likely precursor to tariffs.
The Financial Times, however, reported that the president was planning to exempt carmakers from some of his tariffs.
A slew of contradictory headlines and the lack of clarity in the market make it difficult for investors, companies and consumers to assess the impact of Trump’s changing stance on trade policy.
“Trump is doing what he said he would on tariffs, and then some.
“While our base case expectation is that tariffs creep lower from here, there is profound uncertainty,” said Paul Diggle, chief economist at Aberdeen.
“These are a stagflationary shock for the US economy (weaker growth, higher inflation), and equities have had to move to incorporate this.”
Coping with that uncertainty is a primary point of focus for the quarterly corporate results season, with investors closely watching outlook provided by corporate America.
Southwest Airlines and Alaska Airlines became the latest US carriers to withdraw their financial forecast due to trade war uncertainty, sending their shares down 4% and 6.3%, respectively, in premarket trading.
Investors have been jittery of late with trade tensions escalating and Trump’s attacks on Powell bringing the central bank’s independence into question.
All three major indexes are in the red year-to-date and the S&P 500 is down over 12% from its February record high.
At 7.14am, Dow E-minis were down 140 points, or 0.35%, S&P 500 E-minis were down 8 points, or 0.15% and Nasdaq 100 E-minis were down 28.25 points, or 0.15%.
Shares of International Business Machines slumped 6.7% after the company said 15 of its government contracts were shelved under a cost-cutting drive by the Trump administration.
Software firm ServiceNow, on the other hand, leapt 7.7% after beating first-quarter (Q1) profit estimates.
Comcast slipped 3.5% after reporting a larger-than-expected decline in broadband customers in Q1, while Proctor & Gamble fell 1.8% after the company cut its annual forecasts.
Alphabet is set to report after the closing bell.
March durable goods and existing home sales data, as well as weekly jobless claims, will also be scrutinised for more clues on the economic outlook.
Minneapolis Fed president Neel Kashkari is also scheduled to speak later in the day.