The major U.S. index futures on the Dow Jones, S&P and Nasdaq are currently pointing to a sharply lower open on Wednesday, with stocks likely to see continued weakness following the substantial downturn seen over the course of the previous session.
Ongoing concerns about the impact of a global trade war are likely to weigh on Wall Street after President Donald Trump’s new tariffs, including a 104 percent total levy on Chinese imports, took effect.
China retaliated by announcing it will increase its tariffs on U.S. goods to 84 percent from 34 percent just after midnight on Thursday.
“China urges the US to immediately correct its wrong practices, cancel all unilateral tariff measures against China, and properly resolve differences with China through equal dialogue on the basis of mutual respect,” China’s finance ministry said in a statement, according to a Google translation.
However, Treasury Secretary Scott Bessent claimed in an interview with Fox Business that China doesn’t actually want to negotiate and called the country “the worst offenders in the international trading system.”
“They have the most imbalanced economy in the history of the modern world, and I can tell you that this escalation is a loser for them,” Bessent said.
JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon said in a separate interview with Fox Business that a recession is the “likely outcome” of the tariff turmoil.
“Investors are looking for any indication that the US government might blink in the face of the turmoil. For now, there are no signs of a willingness to back down or hit pause on tariffs,” said AJ Bell investment director Russ Mould. “The longer the situation persists, the harder and more complex it will be to unpick.”
Stocks moved sharply higher early in the session on Tuesday but showed a substantial downturn over the course of the trading day. The major averages pulled back well off their highs of the session and tumbled firmly into negative territory.
The major averages climbed off their worst levels going into the close but still posted significant losses on the day. The Nasdaq plunged 335.35 points or 2.2 percent to 15,267.91, the S&P 500 slumped 79.48 points or 1.6 percent to 4,982.77 and the Dow slid 320.01 points or 0.8 percent to 37,645.59.
Earlier in the day, the Dow had jumped by nearly 3.9 percent, while the S&P 500 and Nasdaq had both surged more than 4 percent.
With the downturn on the day extending the recent nosedive, the Dow and the Nasdaq dropped to their lowest closing levels in over a year and the S&P 500 hit a nearly one-year closing low.
The early rally on Wall Street partly reflected optimism about negotiations on President Donald Trump’s new tariffs that could help avoid a global trade war.
Treasury Secretary Scott Bessent said approximately 70 countries have approached the White House about trade talks, with Japan purportedly getting priority status.
“I think you are going to see some very large countries with large trade deficits come forward very quickly,” Bessent said during an interview on CNBC. “If they come to the table with solid proposals, I think we can end up with some good deals.”
Trump also said in a post on Truth Social that he had a “great call” with South Korea’s acting President Han Duck-soo and said the country’s “top TEAM is on a plane heading to the U.S., and things are looking good.”
Traders also looked to pick up stocks at reduced levels following the recent nosedive, which saw the major averages hit their lowest intraday levels in over a year on Monday before regaining ground.
Buying waned over the course of the session, however, as tensions over tariffs continue to rise between the U.S. and China.
China has vowed to “fight to the end” after Trump threatened to impose an additional 50 percent tariff on Chinese goods unless the country withdraws its new 34 percent tariff on U.S. goods.
Oil service stocks came under considerable selling pressure over the course of the session, dragging the Philadelphia Oil Service Index down by 5.0 percent to its lowest closing level in over three years.
The sell-off by oil service stocks came as the price of crude oil pulled back sharply after rebounding earlier in the day, tumbling to its lowest levels in four years.
Substantial weakness also emerged among airline stocks, with the NYSE Arca Airline Index plummeting by 4.0 percent to a four-year closing low.
Biotechnology stocks also showed a significant move to the downside, as reflected by the 3.9 percent slump by the NYSE Arca Biotechnology Index.
Computer hardware, semiconductor, oil producer and housing stocks also moved notably lower amid another day of broad based weakness on Wall Street.
Dow Jones, S&P, Nasdaq, Escalating Trade War Likely To Lead To Continued Weakness On Wall Street
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