All three main indexes dropped more than 1% on Monday, with financials and software stocks among the worst hit as the fallout from Friday’s US Supreme Court ruling on Trump’s tariffs prompted investors to flee high-risk equities.
Trump announced a temporary global tariff of 10% after Friday’s ruling, which came into effect on Tuesday. He later said the levy would be 15%, but it was unclear when and if it would apply.
“While the direct impact of tariffs may prove temporary from a monetary perspective, the lack of clarity regarding their duration and scope keeps volatility elevated,” said Antonio Di Giacomo, senior market analyst at brokerage XS.com.
Analysts also attributed Monday’s slide to a bearish report from Citrini Research outlining potential threats to the global economy from the rise of artificial intelligence.
At 06:04am ET, Dow E-minis YMcv1 rose 133 points, or 0.27%, S&P 500 E-minis EScv1 added 17.5 points, or 0.25%, and Nasdaq 100 E-minis NQcv1 gained 88.75 points, or 0.36%.
Most megacap and growth stocks inched higher in premarket trading after Monday’s bruising, with Microsoft and Meta Platforms rebounding slightly following sharp losses on Monday.
Home Depot climbed 2.7% after the home-improvement retailer beat fourth-quarter sales estimates.
Keysight Technologies climbed 16.2% after the electronic equipment maker forecast second-quarter profit ahead of Wall Street estimates.
Hims & Hers Health slipped 6.8% after the online telehealth company forecast first-quarter revenue below estimates.
The week’s big-ticket event, earnings from AI major Nvidia, is due after markets close on Wednesday. Nvidia shares were last up 0.5%.
Major software players Salesforce and Intuit are also scheduled to report results later this week, which could draw greater attention as software companies have taken a hit from growing AI-disruption fears.
The S&P 500 software and services index, down almost 24% so far this year, saw no respite on Monday and fell 4.3%. It was one of the worst-performing sectors in Monday’s selloff.
February has been a dour month for US stocks as high stock valuations and AI disruption fears pressure technology and other sectors, with investors questioning if massive AI spending was paying off.
Trump will deliver the traditional State of the Union address to Congress later on Tuesday.
At least six Federal Reserve officials are also slated to speak through the day, as investors look for hints on the future policy path.
Traders currently expect the US Federal Reserve to hold its lending rate steady in its March meeting, with the next cut currently expected in June, according to the CME FedWatch Tool.