On Tuesday morning, U.S. stock futures jumped. This jump came on the heels of then-President Trump’s announcement that he would delay the deadline for implementing tariffs on imports from the European Union. This announcement comes after a very difficult week for the stock market as all major indexes experienced losses.
It’s been a busy earnings season with more than 95% of S&P 500 companies already having reported their latest results. Perhaps most impressively, almost 78% of them beat analyst expectations, per data from FactSet. That’s right, even with one of the best earnings performances by U.S. stocks in recent memory, the stock market got rocky last week. The Dow Jones Industrial Average plunged more than 2% as new worries about tariffs and the crisis at tech giant Apple doused the markets’ optimism. The S&P 500 and Nasdaq Composite were lower, dropping 2.6% and about 2.5%, respectively.
Hence, the U.S. stock market remained closed on Monday to observe Memorial Day. Currently, investors are optimistically awaiting more news on the economic front as they head into an important week of data releases regarding durable goods, housing, and consumer confidence due later this week.
When Trump last announced the tariff extension, S&P 500 futures instantly shot up by over 1.2%. Coincident with this rebound, Nasdaq 100 futures were taking an extraordinary leap of 1.3%. Dow futures quickly spiked by nearly 400 points, more than 1 percent gain implied, as investors digested generally good news. This was a significant reversal compared to last week’s steep losses in all three major indexes.
Just recently Trump had threatened a massive 50% import tax on EU goods starting June 1. After consulting with European Commission President Ursula von der Leyen, he chose to extend the deadline. It has since been rescheduled for July 9.
“While the delay in EU tariffs has provided a short-term boost to futures markets, underlying concerns about trade relations and upcoming economic indicators continue to weigh on investor sentiment.” – Naeem Aslam
Investors are watching these developments closely. They are preparing for the impact that escalating trade tensions and coming economic data could have on market performance. Whether those economic implications are broadly positive or negative will be key in driving investor sentiment. Investors will have to keep their heads above these stormy seas moving forward.