U.S. stock index futures experienced a decline at the start of the new quarter on Tuesday as investors faced uncertainty surrounding the upcoming announcement of new tariffs by the Trump administration. The worries stemmed from the potential economic impact of these tariffs and increased spending on artificial intelligence by technology companies, which contributed to a downturn on Wall Street in the previous quarter. The S&P 500 index concluded the quarter with a 4.6% decline, its worst performance in three months since July 2022.
President Donald Trump is scheduled to unveil the introduction of "reciprocal tariffs" on April 2, aiming to align U.S. tariffs with those of other nations. While specific details were scarce, White House officials have proposed imposing tariffs of approximately 20% on most imports to the United States. Consequently, S&P 500 E-minis dropped 0.22%, Nasdaq 100 E-minis decreased by 0.14%, and Dow E-minis fell by 0.3% by 6:13 a.m. ET.
Investors have been turning to U.S. government bonds and gold for safety and selling off U.S. stocks, especially tech stocks, due to concerns that tariffs could hinder economic growth and prompt inflation. Trump has already implemented tariffs on imported steel and aluminum and raised tariffs on Chinese goods, with higher duties on automobiles set to take effect soon.
The impact of tariffs on the U.S. economy and the Federal Reserve's monetary policy trajectory could be further illuminated by manufacturing activity reports for March and JOLTS job openings data to be released later. Members of the Federal Reserve, including New York Fed President John Williams and Richmond Fed President Thomas Barkin, have expressed concerns about potential inflation increases and adverse effects on job markets due to the administration's tariffs.
Goldman Sachs raised the likelihood of a U.S. recession to 35% from 20% and anticipated additional interest rate cuts within the year. Johnson & Johnson saw a 3% decline in premarket trading following the rejection of its $10 billion settlement proposal for ovarian cancer lawsuits.
Apparel maker PVH Corp's shares rose approximately 17% after surpassing analysts' expectations in its annual earnings forecast. Tesla's shares increased by 3.7% in anticipation of its first-quarter vehicle deliveries report slated for Wednesday, despite a 36% drop in its shares in the previous quarter.