The major U.S. index futures on the Dow Jones, S&P and Nasdaq are currently pointing to a sharply lower open on Thursday, with stocks likely to give back ground following the historic rally seen over the course of the previous session.
Traders may look to cash in on the spike seen in afternoon trading on Wednesday after President Donald Trump announced a 90-day pause on new “reciprocal tariffs.”
Ongoing concerns about rising trade tensions between the U.S. and China may weigh on the markets, as Trump excluded the country out of the pause and even raised the tariff on Chinese goods to 125 percent.
Uncertainty about what will happen between now and the end of the 90-day pause may also lead to some apprehension on Wall Street.
“While the 90-day pause is welcome news for stocks, the lack of long-term clarity may become more of an issue as time goes on,” said AJ Bell investment director Russ Mould.
The futures remained sharply lower even after the Labor Department released a report unexpectedly showing a slight decrease by U.S. consumer prices in the month of March.
Following the nosedive seen over the past several sessions, stocks showed an astonishingly strong move back to the upside during trading on Wednesday. The major averages all moved sharply higher, posting their biggest one-day gains in years.
The major averages saw continued strength late in the day, reaching new highs for the session. The Nasdaq soared 1,857.06 or 12.2 percent to 17,124.97, the S&P 500 spiked by 474.13 points or 9.5 percent to 5,456.90 and the Dow surged 2,962.86 points or 7.9 percent to 40,608.45.
Stocks showed a lack of direction early in the day but skyrocketed after Trump announced a 90-day pause on new “reciprocal tariffs” on most countries to allow for negotiations.
White House press secretary Karoline Leavitt told reporters that tariffs would be brought down to a “universal 10 percent” level during the 90-day pause.
With the rally, the major averages offset a huge chunk of the nosedive seen in the days after Trump initially announced the new tariffs last Wednesday.
“The stock market rebound is a combination of speculative investors needing to cover short positions; less fear of recession and stagflation; and optimism that tariff rates will ultimately end up lower than they are threatened today,” said Bill Adams, Chief Economist for Comerica Bank.
However, the pause will not apply to China, as Trump announced he is raising the tariff on the country to 125 percent due to the “lack of respect” they have shown to the world’s markets.
The higher tariffs on China come after the country retaliated to a previous increase by announcing it will raise its tariffs on U.S. goods to 84 percent from 34 percent just after midnight on Thursday.
In an earlier Truth Social post, Trump urged investors to “be cool,” claimed “everything is going to work out well” and called this a “great time to buy.”
Semiconductor stocks skyrocketed in reaction to the latest tariff news, with the Philadelphia Semiconductor Index soaring by 18.7 percent after ending the previous session at its lowest closing level in over a year.
Substantial strength also emerged among airline stocks, as reflected by the 15.3 percent spike by the NYSE Arca Airline Index. The index bounced off a four-year closing low.
Oil service stocks also moved sharply higher amid a significant rebound by the price of crude oil, driving the Philadelphia Oil Service Index up by 12.9 percent.
Computer hardware, software and networking stocks also showed strong moves to the upside, moving higher along with most of the other major sectors.
Dow Jones, S&P, Nasdaq, Traders May Cash In On Yesterday’s Spike Amid Lingering China Concerns
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