U.S. stock index futures faced challenges on Wednesday following a significant sell-off in the prior session due to the implementation of President Donald Trump's reciprocal tariffs, raising concerns about their impact on the global economy.
Investors rapidly pulled out from stocks and industrial commodities as hopes for trade concessions dwindled, and tariffs, particularly a substantial 104% duty on Chinese goods, came into effect for numerous countries.
The previous day, U.S. equities had risen on the prospect of tariff agreements, but the gains were short-lived, leading to declines across all three major indexes.
Since the announcement of the tariffs by Trump a week ago, the S&P 500 has lost over $5.83 trillion in market value. It could enter a bear market territory if it falls more than 20% from its peak. Currently, it is down 19% from its highest point.
Dow E-minis were down by 155 points, S&P 500 E-minis dropped by 6.75 points, and Nasdaq 100 E-minis increased by 53.25 points around 4:52 a.m. ET.
John Velis, Americas macro strategist at BNY, mentioned in a statement that the U.S. has altered its role in the global trading order by imposing extensive tariffs.
The CBOE Volatility Index, a measure of market fear, was at 49.1 points, near its highest level since August.
In premarket trading, many megacap and growth stocks experienced slight gains, particularly Tesla and Nvidia, which saw over a 2% increase in their stock prices.
In a contrast, U.S.-listed Chinese companies saw strong growth in their shares, aligning with gains observed in the Chinese market, supported by state holding firms and Chinese brokerages.
E-commerce giant Alibaba saw a 7% rise, PDD Holdings, the parent company of Temu, increased by 3.5%, while the iShares MSCI China ETF added 5.8%.
The market also saw an increase in government bond yields and a decline in prices as concerns about a potential U.S. recession raised expectations of interest rate cuts by the Federal Reserve. The 10-year note yield briefly reached its highest level since February and was at 4.34%.
Traders, as per LSEG data, anticipate over 100 basis points of easing by December, signifying expectations for four 25-basis-points cuts. The release of the Fed's March meeting minutes and Thursday's consumer price inflation report could offer further insights into the inflation trend.