U.S. equity futures slipped early Tuesday, as investors exercised caution ahead of key developments on trade policy and fresh economic data that could shape market direction in the days ahead.
As of 5:40 a.m. ET, futures tied to the Dow Jones Industrial Average were down 160 points (0.4%), while S&P 500 and Nasdaq 100 futures each declined by 0.4% and 0.3%, respectively.
Despite Monday’s modest gains across major indexes – the S&P 500 added 0.4%, the Nasdaq climbed 0.7%, and the Dow edged up 0.1% – sentiment remains fragile due to escalating trade tensions and mixed economic signals.
Tariff Concerns Dominate Market Sentiment
Investors are digesting President Donald Trump’s weekend announcement to double tariffs on steel and aluminum imports from 25% to 50%, reigniting concerns about rising costs and inflation. The move, framed as a defensive measure to protect domestic industries, has stirred fears of retaliation from trade partners – particularly China, which rejected claims of trade violations and reiterated its commitment to safeguarding its interests.
With a self-imposed 90-day freeze on a wide range of reciprocal tariffs set to expire in July, the White House is racing to finalize trade deals with multiple nations. According to Reuters, Washington has given partners until Wednesday to submit their best offers. While officials hint that several agreements are nearing completion, the U.K. remains the only publicly confirmed deal so far.
Legislative Watch: Tax Cuts and Government Spending
In parallel, Wall Street is closely monitoring progress on a sweeping tax and spending proposal making its way through Congress. President Trump has characterized the bill as the most significant reduction in government spending in U.S. history. Critics, however, warn that it could widen the federal deficit and exacerbate concerns about mounting national debt.
Key Labor Data on Deck
Market participants are also looking ahead to the Job Openings and Labor Turnover Survey (JOLTS), due later in the day, as a preview to Friday’s all-important nonfarm payrolls report. Economists forecast a slight decline in job openings to 7.11 million in April, down from 7.19 million the month prior.
Meanwhile, May’s auto sales figures are expected to shed light on consumer behavior, particularly whether recent purchases have been pulled forward in anticipation of higher vehicle costs tied to the proposed tariffs.
Despite persistent trade-related uncertainties, the broader U.S. economy has remained relatively resilient. Still, the OECD recently trimmed its 2025 U.S. growth forecast to 1.6%, down from a previous projection of 2.2%, citing the negative impact of ongoing tariff measures.
Equity Flows Turn Positive
On the corporate front, earnings are due before the market opens from Dollar General (NYSE:DG), Signet Jewelers (NYSE:SIG), and electric vehicle maker Nio (NYSE:NIO), among others, as the earnings season winds down.
Equity flows flipped positive last week, according to Bank of America, with its clients pouring $2.3 billion into stocks after a week of net selling. Most of the buying was focused on individual names, while equity ETFs continued to see outflows. Financials, Consumer Discretionary, and Industrials led inflows, while the tech sector posted its third consecutive week of net outflows across all investor categories.
Oil Prices Extend Rally
Crude oil prices edged higher on Tuesday, continuing momentum from Monday’s strong session. Brent crude was up 0.4% at $64.83 per barrel, and West Texas Intermediate (WTI) also rose 0.4% to $62.79.
Market expectations that Iran will reject a U.S. proposal aimed at resolving longstanding nuclear disputes suggest sanctions on Iranian oil will remain in place, supporting prices. Meanwhile, geopolitical risk from tensions in Eastern Europe has added further supply-side uncertainty.
Adding to the bullish sentiment, OPEC+ reaffirmed its decision to increase output by 411,000 barrels per day in July – an amount that came in below some traders’ expectations, providing further lift to oil futures.