US stock index futures experienced a slight rebound on Wednesday, offering a moment of respite after a turbulent session marked by a significant selloff.
However, the underlying anxieties surrounding President Trump’s protectionist trade policies and their potential impact on inflation continue to weigh heavily on investors’ minds.
All eyes are now on the upcoming release of key inflation data, which could either alleviate or exacerbate these market jitters.
As Trump’s 25% duty on all steel and aluminum imports, announced last month, officially took effect, the European Commission responded with a retaliatory volley of counter tariffs.
This escalation marks the latest salvo in a growing trade war, further unsettling global markets and threatening to disrupt established trade relationships.
While the tariff impacts are broad, companies such as Ford, General Motors, Howmet and Honeywell, which use steel and aluminum in their supply chains, were little changed in premarket trading, indicating that the extent of their exposure is still being priced into markets.
Market instability triggers analyst warnings
Financial markets have been thrown into disarray by Trump’s wavering tariff policy, with analysts warning of potential capital flight from Wall Street as concerns mount that these protectionist measures could stoke inflation and potentially trigger a recession.
This uncertainty has also prompted companies to adopt a more cautious approach, holding back on planned investments and revising their earnings forecasts downward.
Delta, Kohl’s, and Walmart are among the latest to join the growing list of companies expressing concerns about the economic outlook.
The tech-heavy Nasdaq confirmed a correction last week, signaling a significant shift in momentum, while the benchmark S&P 500 came perilously close to confirming a 10% drop from its February high during the previous session.
Reflecting the growing pessimism, Goldman Sachs recently became the first major brokerage to lower its 2025-end target for the S&P 500 index, reducing it from 6,500 to 6,200.
Meanwhile, JPMorgan is now estimating a roughly 40% recession risk, a notable increase from the 30% probability it assigned at the start of the year.
At 05:39 a.m. ET, Dow E-minis were up 196 points, or 0.47%, S&P 500 E-minis were up 36 points, or 0.65%, and Nasdaq 100 E-minis were up 149.25 points, or 0.77%.
These early gains offer a glimmer of hope for a market recovery, but the underlying anxieties remain palpable.
Inflation data in the spotlight
The Consumer Price Index (CPI) figure for February, scheduled for release at 8:30 a.m. ET, will be closely scrutinized by investors seeking clues about the direction of inflation.
While economists expect the data to indicate a cooling trend from the previous month, concerns remain that the impact of tariffs could become apparent in upcoming reports.
Interest rate futures suggest that the US Federal Reserve is likely to hold borrowing costs steady at its meeting next week.
However, traders anticipate that signs of economic weakness could force the central bank to deliver at least 75 basis points worth of interest-rate cuts by December, reflecting a growing belief that the Fed may need to take action to stimulate the economy.
Among individual stocks, Intel experienced a notable jump of 8.2% in premarket trading following reports that TSMC had pitched chip designers Nvidia, Advanced Micro Devices, and Broadcom about taking a stake in a joint venture to operate the US chip company’s factories.
Other chipmakers also benefited from this news, with Nvidia rising 1.6% and Advanced Micro Devices and Broadcom adding 0.9% each.
On the other hand, Walmart dipped 0.7% after reports surfaced that Chinese officials met with company representatives this week to discuss media reports that the retailer has asked suppliers in China to slash prices to offset US tariffs.
The markets were also monitoring geopolitical developments, including the announcement that Ukraine had agreed to a 30-day ceasefire with Russia.
While this news offered a potential source of stability, the long-term impact of the conflict and its implications for the global economy remain uncertain.
Short-term relief, long-term worries
The current market environment is characterized by a delicate balance between short-term relief and lingering long-term concerns.
While the rise in futures trading on Wednesday offers a welcome respite after the previous session’s turmoil, the underlying anxieties surrounding trade policies, inflation, and economic growth continue to cast a shadow over Wall Street.
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