The major U.S. index futures are currently pointing to a roughly flat open on Tuesday, with stocks likely to show a lack of direction after seeing considerable volatility in the previous session.
Traders may be reluctant to make significant moves as they digest the latest developments regarding President Donald Trump’s tariffs.
While Trump has agreed to pause 25 percent tariffs on imports from Mexico and Canada for a month, China has slapped retaliatory tariffs on U.S. imports in response to a 10 percent trade duty imposed on Chinese goods.
China’s Finance Ministry said it will impose a 15 percent duty on imports of coal and liquefied natural gas from the U.S.
In addition, there will be a 10 percent tariff on imports from the U.S. of crude oil, agricultural equipment and automobiles beginning February 10.
Traders may also stick to the sidelines ahead of the release of the Labor Department’s closely watched monthly jobs report on Friday.
The report, which is expected to show employment climbed by 170,000 jobs in January after jumping by 256,000 jobs in December, could impact the outlook for interest rates.
Stocks moved sharply lower early in the session on Monday but regained ground over the course of the trading day. The major averages climbed well off their worst levels, with the Dow briefly reaching positive territory, but ended the day in the red.
After plunging by as much as 2.5 percent in early trading, the tech-heavy Nasdaq finished the session down 235.49 points or 1.2 percent at 19,391.96. The S&P 500 also slid 45.96 points or 0.8 percent to 5,994.57, while the Dow fell 122.75 points or 0.3 percent to 44,421.91.
The recovery attempt by stocks came after President Donald Trump confirmed he has reached an agreement with Mexican President Claudia Sheinbaum to pause recently implemented tariffs on Mexico for one month.
The tariff pause comes after Sheinbaum said Mexico will immediately reinforce its northern border with 10,000 members of its National Guard to prevent drug trafficking from Mexico to the United States, particularly fentanyl.
Stocks moved sharply lower in early trading amid concerns about a global trade war after Trump officially imposed a 25 percent tariff on imports from Canada and Mexico and a 10 percent tariff on imports from China.
A statement from the White House said Trump is taking “bold action to hold Mexico, Canada, and China accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country.”
Trump also threatened possible tariffs against the United Kingdom and the European Union, marking a significant escalation.
Canada and Mexico ordered retaliatory tariffs on American goods, while China vowed countermeasures. The EU also warned of firm retaliation if targeted.
Investors fear that a trade war could hit the earnings of major companies and dent global growth. The tariffs could also lead to renewed inflation fears, leading the Federal Reserve to keep interest rates on hold for longer.
Computer hardware stocks regained ground after an early sell-off but still ended the day significantly lower, dragging the NYSE Arca Computer Hardware Index down by 2.6 percent.
Considerable weakness also remained visible among housing stocks, as reflected by the 2.4 percent slump by the Philadelphia Housing Sector Index.
Airline, semiconductor and banking stocks also saw notable weakness, while gold stocks moved higher along with the price of the precious metal.
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