US Stock Futures Slip Ahead Of 'Liberation Day' Tariffs Announcement: Expert Points To Uncertainty Amid Higher Risk Premia
U.S. stock futures slipped on Wednesday after a mixed session on Tuesday. Futures of major benchmark indices were lower in premarket trading.
As the “Liberation Day” has arrived, traders will look for cues from President Donald Trump’s “reciprocal tariffs” scheduled to be announced later today.
The administration is reportedly considering a widespread 20% tariff that would affect a large portion of the $3 trillion in yearly imports, according to a Washington Post report.
The 10-year Treasury bond yielded 4.17% and the two-year bond was at 3.88%. The CME Group's FedWatch tool shows markets pricing in an 85.5% likelihood of the Federal Reserve maintaining current interest rates through its May meeting.
| Futures | Change (+/-) |
| Dow Jones | -0.17% |
| S&P 500 | -0.22% |
| Nasdaq 100 | -0.29% |
| Russell 2000 | -0.30% |
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, dropped in premarket on Tuesday. The SPY was down 0.25% to $559.58, while the QQQ declined 0.34% to $471.10, according to Benzinga Pro data.
Cues From Last Session:
Driven by gains in consumer discretionary, communication services, and information technology, the S&P 500 closed slightly higher on Tuesday, though overall U.S. stocks settled mixed.
Conversely, the health care and financial sectors experienced declines. This sector divergence occurred as investors anticipated the Trump administration’s upcoming tariff announcements.
Meanwhile, broader market indices reflected significant losses for March and the first quarter of the year: the S&P 500 saw its largest monthly drop since December 2022, falling 5.8%, while the Nasdaq and Dow tumbled 8.2% and 4.2% respectively. Quarterly, the Nasdaq declined 10.4%, the Dow 1.3%, and the S&P 500 also recorded a loss.
Economic data revealed a decline in the ISM manufacturing PMI, an increase in construction spending, and a decrease in job openings.
| Index | Performance (+/-) | Value |
| Nasdaq Composite | 0.67% | 17,449.89 |
| S&P 500 | 0.38% | 5,633.07 |
| Dow Jones | -0.028% | 41,989.96 |
| Russell 2000 | 0.016% | 2,012.24 |
Insights From Analysts:
As investors await further direction on the economy’s outlook after Trump’s tariffs, Jurrien Timmer, the director of global macro at Fidelity Investments, in his recent note said that “More uncertainty means higher risk premia.”
Th refers to the additional return investors expect to receive for taking on a riskier investment compared to a risk-free investment. It’s essentially the reward for bearing greater uncertainty.
He observes a significant shift in market sentiment, moving from confidence to doubt. He notes, “Markets continue to price in a possible left tail,” with the S&P 500 hovering at the -10% correction threshold.
Timmer distinguishes between sharp, swift drawdowns, like the 1998 LTCM crisis, and potential recession-driven corrections. “Market cycles that are priced for recessions that don't happen are the ones we want to rebalance into.” However, he cautions that if fiscal austerity and trade tensions trigger a recession, “we are likely not done correcting.” The core-PCE inflation rate near 3% further complicates matters, potentially limiting the Fed’s support.
While acknowledging the difficulty of predicting market movements in real time, he emphasizes the importance of analyzing “the tape, sentiment, valuation, earnings estimates, and credit.” While the market appears “moderately oversold” and sentiment is cautious, it doesn’t indicate recessionary pricing, warranting “further patience.”
Regarding diversification, Timmer points to the performance of international equities, Treasuries, and gold. He also poses the crucial question: “whether the rotation out of the Mag 7 is a bump along the road to continued AI and mega cap dominance, or the BIG one.” He stresses that if a new secular regime is emerging, “the game going forward will be all about the alpha instead of the beta,” necessitating a wider asset allocation and lower equity return expectations.
Timmer also notes the historical occurrence of 10% drawdowns, stating “The odds of being in a 10% drawdown have been around 40% for the S&P 500,” and that there is no clear historical pattern of what happens after a 10% decline. He also notes a similarity between the current market and the 1998 LTCM crisis, both catalyzed by an unwinding of crowded trades.
According to Eugenia Mykuliak, the founder and executive director at B2PRIME Group, tariffs can cause a disruption in global supply chains, which will lead businesses to reassess their supply routes.
A recalibration of the supply chain will lead to “Capital outflows from emerging markets and increased market volatility,” said Mykuliak.
See Also: How to Trade Futures
Upcoming Economic Data
Here’s what investors will keep an eye on Wednesday:
- March’s ADP employment data will be out by 8:15 a.m. ET.
- February’s factory orders data will be released at 10:00 a.m. ET.
- Fed Governor Adriana Kugler will speak at 4:30 p.m. ET.
Stocks In Focus:
- UniFirst Corp. (NYSE:UNF) was up 0.36% in premarket on Wednesday ahead of its earnings before the opening bell. Analysts expect a quarterly earnings of $1.34 per share on revenue of $602.80 million.
- BlackBerry Ltd. (NYSE:BB) advanced 3.22% as Wall Street expects it to report a quarterly earnings of 1 cent per share on revenue of $132.83 million before the opening bell.
- RH (NYSE:RH) rose 2.07% ahead of its earnings after the closing bell. Analysts expect a quarterly earnings of $1.92 per share on revenue of $829.56 million.
- Sportsman’s Warehouse Holdings Inc. (NASDAQ:SPWH) jumped 31.61% after posting stronger-than-expected earnings and sales results for its fourth quarter on Tuesday.
- nCino Inc. (NASDAQ:NCNO) plunged 31.33%, reporting weaker-than-expected earnings for its fourth quarter, while sales topped estimates. The company also said it sees first-quarter total revenue of $138.75 million to $140.75 million and adjusted earnings of 15 cents to 16 cents per share.
- Advanced Micro Devices Inc. (NASDAQ:AMD) was 0.45% lower after completing its $4.9 billion acquisition of data-center equipment designer ZT Systems.
- Syra Health Corp. (NASDAQ:SYRA) slumped 59.24% after it announced a voluntary delisting from the Nasdaq Capital Market.
- Seritage Growth Properties (NYSE:SRG) declined 29.29% after it generated $61.8 million in asset sales, but reported a $158.4 million net loss for the year.
- Sunshine Biopharma Inc. (NASDAQ:SBFM) surged 54.77% after its 2024 revenue surged to $34.9 million from $24.1 million in the year-ago period.
- Antelope Enterprise Holdings Ltd. (NASDAQ:AEHL) plummeted 30.05% after announcing a 1-for-40 reverse stock split.
Commodities, Gold, And Global Equity Markets:
Crude oil futures were trading lower in the early New York session by 0.13% to hover around $71.11 per barrel.
Gold Spot US Dollar advanced 0.30% to hover around $3,133.45 per ounce. Its fresh record high stood at $3,149.03 per ounce. The U.S. Dollar Index spot was lower by 0.11% at the 104.144 level.
Asian markets closed on a mixed note on Wednesday. Japan's Nikkei 225 and Australia's ASX 200 index advanced. Whereas China’s CSI 300, Hong Kong's Hang Seng, and South Korea's Kospi index fell. European markets were also mixed in early trade.
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