U.S. Stock Futures Rise; Mood Remains Subdued After Tariff Implementation

U.S. stock futures edged higher on Wednesday, attempting to stabilize after recent sharp losses. However, market sentiment remains fragile following the implementation of President Donald Trump’s latest reciprocal tariffs, which have intensified the ongoing trade war and heightened concerns about a potential global recession.

As of 05:15 ET (09:15 GMT), Dow Jones Futures rose 25 points (0.1%), S&P 500 Futures climbed 20 points (0.4%), while Nasdaq 100 Futures lagged, dropping 140 points (0.8%).

Tuesday’s trading session saw significant volatility, with the S&P 500 closing 1.6% lower at 4,982.77—its first drop below the 5,000 mark in nearly a year. The index is now down nearly 19% from its record high, edging closer to bear market territory. Meanwhile, the Dow has shed more than 4,500 points over four days, while the Nasdaq Composite has lost over 13% in the same period.

Trump’s Tariff Hike Escalates U.S.-China Trade Tensions

The latest round of U.S. tariffs officially took effect on Wednesday, including a steep 50% increase on Chinese imports. This move brings the cumulative tariff burden on Chinese goods to 104%, reigniting trade tensions between the world’s two largest economies.

In response, China announced retaliatory tariffs of 34%, with its foreign ministry warning that Beijing will take “resolute and forceful” measures to protect its interests.

“If the U.S. genuinely wants to resolve this issue through negotiation, it must approach the talks with equality, respect, and a spirit of mutual benefit,” Foreign Ministry Spokesperson Lin Jian stated.

The sweeping tariff measures extend beyond China, with additional duties imposed on multiple trading partners:

• European Union: 20%
• Japan: 24%
• Vietnam: 46%
• South Korea: 25%
• Taiwan: 32%

These aggressive trade policies have sent shockwaves through global financial markets, fueling concerns of a broader economic downturn.

Goldman Sachs: Markets Not Fully Pricing in Recession Risks

Despite recent stock market declines, Goldman Sachs analysts warn that recession risks are still not fully reflected in market prices.

“Among common recession indicators, only the VIX volatility index is at levels associated with past downturns. Other key metrics—such as longer-dated equity volatility, credit spreads, and the yield curve—are not yet signaling full recession pricing,” analysts wrote in a note.

They cautioned that further downside is possible, with weaker equities, wider credit spreads, and a more aggressive Federal Reserve rate-cutting cycle likely if the trade war continues.

Federal Reserve Minutes in Focus

Beyond trade developments, investors are closely monitoring the Federal Reserve’s meeting minutes, set for release later today.

On Tuesday, San Francisco Fed President Mary Daly reiterated that there is “no rush” to cut interest rates, despite market uncertainty surrounding Trump’s tariff policies.

However, speculation is growing that the Fed may begin easing its policy as early as next month to offset the economic drag from the tariffs. According to CME Group’s interest rate futures, the probability of a Fed rate cut in May has jumped to 56%, up from 40% earlier in the day.

Corporate Earnings & Oil Price Declines

In the corporate sector, investors are awaiting earnings results from Delta Air Lines (NYSE: DAL), which recently issued a profit warning due to economic uncertainty. Constellation Brands (NYSE: STZ), the parent company of Modelo and Pacifico beer, will release its financial results after the market closes.

Meanwhile, crude oil prices have plunged to four-year lows as trade war concerns mount. As of 05:15 ET:

• Brent crude: Down 2.6% to $61.20 per barrel
• West Texas Intermediate (WTI): Down 2.7% to $57.98 per barrel

Since Trump’s tariff hikes were announced on April 2, oil prices have tumbled by nearly 20%, marking their worst five-day drop since March 2022.

Market Outlook: Volatility Ahead

With escalating trade tensions, growing recession fears, and a volatile stock market, investors are bracing for more turbulence in the days ahead. The Federal Reserve’s next steps and potential trade policy reversals will be key factors in determining the market’s direction.