U.S. stock futures point to a sharply lower open on Tuesday, signaling that equities may retreat after Monday’s strong rebound as rising trade tensions between Washington and Beijing resurface.
The cautious mood follows Monday’s rally, which was fueled in part by President Donald Trump’s softer tone on China.
Addressing China’s expanded export controls on rare earth elements, a spokesperson for the Chinese Ministry of Commerce stated that Beijing’s actions were a direct response to U.S. measures targeting Chinese firms.
“The US has long overstated national security, abused export controls, and adopted discriminatory practices against China,” the spokesperson said, according to Google Translate.
They added, “In particular, since the Madrid trade talks between China and the U.S., the U.S. has continued to impose a series of new restrictive measures on China, which have seriously harmed China’s interests and seriously undermined the atmosphere of the bilateral trade talks.”
The spokesperson emphasized that China is ready to “fight to the end” if the trade conflict escalates but also noted that the “door is open” to negotiations.
China has also imposed sanctions on five U.S.-based subsidiaries of South Korea’s Hanwha Ocean, accusing the shipping company of cooperating with Washington’s restrictions on its maritime sector.
On Monday, stocks surged out of the gate and held on to strong gains through the session, recovering part of Friday’s steep selloff.
The Nasdaq jumped 490.18 points, or 2.2%, to 22,694.61. The S&P 500 climbed 102.21 points, or 1.6%, to 6,654.72, and the Dow gained 587.98 points, or 1.3%, to close at 46,067.58.
The rebound was largely driven by bargain hunting after the major indexes hit their lowest closing levels in a month on Friday. That decline came after Trump threatened a “massive increase” in tariffs on Chinese imports in retaliation for Beijing’s rare earth restrictions.
On Sunday, Trump struck a more reassuring note on Truth Social, saying: “Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!”
The market’s recovery also coincided with a quiet economic calendar, which is expected to remain light due to the ongoing U.S. government shutdown.
The Bureau of Labor Statistics announced that the consumer price inflation report, originally set for Wednesday, will be released on Friday, October 24. The agency noted the data is crucial for the Social Security Administration to meet legal deadlines to ensure timely benefits payments.
Semiconductor and tech hardware stocks led Monday’s rally, with the Philadelphia Semiconductor Index and NYSE Arca Computer Hardware Index both soaring 4.9%.
Gold-related stocks also showed strength as gold prices hit a record high, boosting the NYSE Arca Gold Bugs Index by 4.7%.
Broad-based buying was seen across several sectors, with notable gains in steel, oil services, networking, and airline shares.
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