The major U.S. index futures are currently pointing to a roughly flat open on Wednesday, with stocks likely to show a lack of direction after moving sharply lower in recent sessions.
The futures had been pointing an initial rebound on Wall Street but gave back ground following the release of a report from payroll processor ADP showing weaker than expected private sector job growth in the month of February.
ADP said private sector employment rose by 77,000 jobs in February after climbing by an upwardly revised 186,000 jobs in January.
Economists had expected private sector employment to grow by 140,000 jobs compared to the addition of 183,000 jobs originally reported for the previous month.
Private sector job growth slowed to the lowest level since last July, with trade and transportation, health care and education, and information showing job losses, ADP said.
After moving sharply lower early in the session, stocks staged a valiant recovery attempt over the course of the trading day on Tuesday only to once again come under pressure going into the close.
The tech-heavy Nasdaq ended the day down 65.03 points or 0.4 percent at 18,285.16 after plunging by as much as 2.1 percent to a nearly five-month intraday low.
The S&P 500 briefly reached positive territory but closed down 71.57 points or 1.2 percent at a four-month closing low of 5,776.15. The Dow also slumped 670.25 points or 1.6 percent to 42,520.99.
The early sell-off on Wall Street came amid concerns about a global trade war after President Donald Trump’s new tariffs on imports from Canada, Mexico and China took effect.
While some traders used the weakness as an opportunity to pick up stocks at reduced levels, buying interest evaporated in the final hour of trading.
The White House said Trump is proceeding with implementing previously paused 25 percent tariffs on Canada and Mexico to combat the extraordinary threat to U.S. national security posed by unchecked drug trafficking.
Trump also increased the tariff on Chinese imports to 20 percent from 10 percent, claiming the country has not taken adequate steps to alleviate the illicit drug crisis.
Canada responded by announcing 25 percent retaliatory tariffs on C$155 billion of American goods, starting with tariffs on C$30 billion worth of goods immediately and tariffs on the remaining C$125 billion in 21 days’ time.
In a subsequent post on Truth Social, Trump said Canada putting a retaliatory tariff on the U.S. will lead to a reciprocal tariff by the same amount.
Meanwhile, Mexican President Claudia Sheinbaum said her government has made “contingency plans” to respond to the new tariffs.
China also said it would impose additional tariffs of 10 to 15 percent on several agricultural goods, including soybeans, corn, dairy and beef.
“Investors were desperately hoping that Trump would delay tariffs on Canada, Mexico and China at the eleventh hour, yet the US president has stuck to his guns and brought them into power,” said Russ Mould, investment director at AJ Bell.
“Naturally, the recipients have started to retaliate and that has raised the prospect of a full-blown trade war,” he added. “Investors knew there was a real chance this would happen but quietly hoped it would all go away and simply be Trump having a bark worse than his bite. Not this time around.”
Banking stocks turned in some of the market’s worst performances on the day, with the KBW Bank Index plunging by 4.6 percent to its lowest closing level in almost two months.
Substantial weakness was also visible among airline stocks, as reflected by the 3.9 percent nosedive by the NYSE Arca Airline Index. The index plummeted to a more than four-month closing low.
Brokerage stocks also showed a significant move to the downside, dragging the NYSE Arca Broker/Dealer Index down by 3.4 percent.
Steel, utilities and commercial real estate stock also ended the day notably lower, while some strength emerged among gold and semiconductor stocks.
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