Stock Futures Rebound as Markets Seek Stability After Tariff-Fueled Sell-Off

Stock futures gained in initial trading on Friday, pointing to a strong close to a turbulent week that has left investors anxious. Following a big decline on Thursday, the market seemed to relax a bit as investors absorbed the latest tariff developments, economic data and earnings.

S&P 500 futures rose 0.65%, and Nasdaq 100 futures rose 0.75%. Dow Jones Industrial Average futures rose 196 points, or 0.49%. It recovered from abysmal losses on Thursday, when the three major indexes fell on concerns regarding President Donald Trump’s tariffs over the last few days. S&P 500 dropped 3.46% on Thursday and erased nearly all of Wednesday’s advance. Dow declined over 1,000 points and lost 2.5%, and Nasdaq Composite declined 4.31%, pulled down by technology stocks and fear of new investors.

That was a sharp reversal of Wednesday’s record-day rally, when the S&P 500 rose 9.52% – its third-largest one-day increase since World War II – and the Dow jumped up by more than 2,900 points. The Wednesday rally followed the president’s hints that he would delay some of the tariffs for 90 days. That was short-lived.

President Trump’s merry-go-round of tariff policy is at fault. On Wednesday, the White House drew on an ad hoc blanket rate of tariffs at 10% on nearly all imports, a colossus of an exception being China. Chinese imports face a tariff at 145%, a bald-faced ratcheting up that has sent shudders of soaring costs and tensions in worldwide trading relations.

Aside from aluminum, automobiles, and other Mexican and Canadian products – nations outside the United States-Mexico-Canada Agreement – are now also facing 25% tariffs. These actions added to the complexity of global trade and left investors and businesspeople wondering what’s next. Jed Ellerbroek, a portfolio manager at Argent Capital Management, summed up the market’s frustration: “Lower tariffs help, but they don’t solve the uncertainty problem. We’re still looking at higher inflation, weaker economic growth, and jittery investors.”

Earnings Season Begins – All Eyes on the Banks

In all the chaos, there is a silver lining: major indexes are still set to record weekly gains. The S&P 500 is up 3.8% for the week, and it’s firmly set to record its best week since November. The Nasdaq will be up 5.1%, and the Dow will be up 3.3%.

On some of that nervously optimistic is activity during first-quarter earnings season. Friday, blue-chip finance giants – Morgan Stanley, JPMorgan Chase, Wells Fargo, and BlackRock to list a few – release their numbers. Their releases may provide some new context on the state of the American economy as it stumbles through all the tariff soap opera.

Economic Data: Consumer Sentiment, Interest Inflation

Investors also look for fresh economic reports. This Friday, the March Producer Price Index (PPI) and the University of Michigan’s April Consumer Sentiment Index will be reported. Those figures could provide some insight into whether or not inflationary pressures are easing or if tariff hikes are beginning to affect consumer sentiment.

Bond Market Reacts to Policy Matters

Not even the American government bond market is immune to this chaos. Friday’s Asian trading saw the U.S. Treasury 10-year yield increase 6 basis points to 4.456%. That’s a continuation of the sales of government bonds that partially have been elicited by concern over Trump’s tariffs.

Bond prices spiked last week momentarily when there was a White House rumor that it was postponing new tariffs on almost all nations. But as markets digested the bitter truth of the 145% tariff to purchase Chinese imports, investors again are willing to pay extra to hold US debt – and that is a danger sign risk sentiment is increasing.

Analysts Sound the Alarm

Market observers are becoming more and more outspoken in their dismay. Thursday’s market action, Krishna Guha of Evercore ISI labeled as “rare, ugly, and worrying.” In a client report, he said the simultaneous sudden fall in equities, bonds, and the U.S. dollar is a sign of just how rattled the financial world has become.

“Markets like clarity,” Guha said. “But what they’re getting is mixed signals and unconventional policy actions.”

What’s Next?

With futures inching up and earnings season about to start overwhelming expectations, this crazy week’s close should provide us with some clarity – or short-term relief from the free-for-all. Don’t get too comfortable: tariff uncertainty is the biggest threat hanging over the market. Until investors are content with their guess in the dark regarding what trade policy will be, at least where China is concerned, the ride will likely be bumpy.

Traders, analysts, and businessmen alike are anxiously waiting – watching, waiting, and hoping that some measure of stability again prevails.