U.S. stock futures experienced a notable rebound on Tuesday night following two consecutive sessions of significant losses across the major indices. The tech-heavy Nasdaq, which had dipped more than 2% at its lowest point, came alarmingly close to entering correction territory—defined as a 10% fall from a recent peak. This recovery in futures comes amid the backdrop of new economic data releases and ongoing trade tensions.
All three major averages suffered sharp declines earlier in the day. The S&P 500 dropped 1.22%, while the Nasdaq Composite shed 0.35%. The blue-chip Dow ended the regular trading session with a substantial loss of 670.25 points, or 1.55%. However, by Tuesday night, futures showed signs of recovery with S&P 500 and Nasdaq 100 futures both adding 0.7% and 0.8%, respectively. Dow futures also rose by 275 points, or 0.7%, shortly after 6 p.m. ET.
The recovery in stock futures coincides with new economic data scheduled for release on Wednesday morning, including the ADP private payrolls report for February and the purchasing managers' index for the previous month. These reports are expected to provide further insights into the economic health of the country.
The market's recent volatility can be partly attributed to President Donald Trump's new 25% tariffs on Canada and Mexico, which officially took effect on Tuesday. Stocks slid for their second consecutive day in response to these tariffs. Commerce Secretary Howard Lutnick hinted that the U.S. might reach a compromise with Canada and Mexico, stating they could potentially "meet somewhere in the middle" to "work something out."
"The thing that we have emphasized over and over again is that Trump introduces uncertainty. We now are at a point where a single tweet or a single release of information can significantly change the interpretation of what markets look like," – Michael Green, chief strategist at Simplify Asset Management.
AeroVironment's recent announcement of weak guidance for its full-year results further contributed to market unease. The company projected adjusted earnings of $2.92 to $3.13 per share on revenue between $780 million and $795 million, which fell short of expectations.
In addition to these developments, companies such as Thor Industries, Abercrombie & Fitch, Campbell's, and Brown-Forman are due to report quarterly earnings on Wednesday, adding another layer of anticipation in the market.
"You almost end up in a forced savings regime, which in turn negatively affects employment, negatively affects wealth, and that's what markets are trying to price right now. We genuinely don't actually know," – Michael Green, chief strategist at Simplify Asset Management.