US Stock Likely To Open Lower Following Trump's Tariffs: 'Worse Than The Worst Case Scenario,' Says Analyst
U.S. stock futures plummeted on Thursday after advancing on Wednesday. Futures of major benchmark indices were down over 2-3% in premarket trading.
Invoking a 1977 law, President Donald Trump declared a trade emergency Wednesday, arguing it was necessary to address the U.S.’s "large and persistent trade deficit." The White House released a fact sheet outlining the new reciprocal tariffs, which Trump justified with the principle, "Treat us like we treat you."
While Canada and Mexico were notably excluded from the tariff program, China, Vietnam, Cambodia, and Sri Lanka face the steepest increases under the new system. Gold prices soared to a fresh record of $3,167.71 per ounce, and investors fled toward safe-haven assets.
The 10-year Treasury bond yielded 4.06% and the two-year bond was at 3.78%. The CME Group's FedWatch tool shows markets pricing in a 76.7% likelihood of the Federal Reserve maintaining current interest rates through its May meeting.
| Futures | Change (+/-) |
| Dow Jones | -2.54% |
| S&P 500 | -3.04% |
| Nasdaq 100 | -3.29% |
| Russell 2000 | -4.29% |
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, slumped in premarket on Thursday. The SPY was down 3.08% to $547.11, while the QQQ declined 3.36% to $460.17, according to Benzinga Pro data.
Cues From Last Session:
Consumer discretionary, industrials, and financials led a broad S&P 500 rally Wednesday, pushing the Dow Jones over 200 points, despite President Trump’s later announcement of trade tariffs.
Tesla Inc. (NASDAQ:TSLA) surged 5%, even after reporting weak delivery numbers. Contrary to the market’s upward trend, consumer staples closed lower.
Positive economic data, showing stronger-than-expected job growth and rising manufacturing orders, contributed to the day’s gains, though Trump’s trade actions sparked fears of a potential economic downturn.
| Index | Performance (+/-) | Value |
| Nasdaq Composite | 0.87% | 17,601.05 |
| S&P 500 | 0.67% | 5,670.97 |
| Dow Jones | 0.56% | 42,225.32 |
| Russell 2000 | 1.65% | 2,045.36 |
Insights From Analysts:
Senior economist Jeremy Siegel, in his weekly commentary, explained that the public is more willing to endure the near-term friction and economic headwinds from the cuts to inefficient government spending rather than "facing higher prices via tariffs, which bring near-term pain with very uncertain long-term benefit."
He said, "Dividend-paying value stocks look increasingly attractive, and I expect the market rotation from growth to dividend stocks to continue."
"Equity weakness has been widespread. The rotation out of growth continues, and the AI-led rally that defined the market over the last three years has decisively broken trend. Growth stocks have taken a larger hit than value stocks," he added.
Meanwhile, other analysts opined with their views on the tariffs. Wedbush’s Daniel Ives said, “We would characterize this slate of tariffs as ‘worse than the worst case scenario’ the Street was fearing.”
Economist Mohamed El-Erian said that the tariffs imposed by Trump point to “major worries about global economic growth.”
Justin Wolfers, senior fellow at the Brookings Institution, said that the "announcement was so much worse than expected that it caused the chance of a 2025 recession to rise from 42% to 52%.”
See Also: How to Trade Futures
Upcoming Economic Data
Here’s what investors will keep an eye on Thursday:
- The initial jobless claims data for the week ending March 29 and February’s U.S. trade deficit data will be released by 8:30 a.m. ET.
- March’s S&P final U.S. services PMI and ISM services will be announced between 9:45 and 10:00 a.m. ET.
- Fed Vice Chairman Philip Jefferson will speak at 12:30 p.m., and Fed Governor Lisa Cook will speak at 2:30 p.m. ET.
Stocks In Focus:
- Acuity Inc. (NYSE:AYI) was down 0.57% in premarket on Thursday ahead of its earnings before the opening bell. Analysts expect a quarterly earnings of $3.70 per share on revenue of $1.03 billion.
- Conagra Brands Inc. (NYSE:CAG) dropped 2.39% as Wall Street expects it to report a quarterly earnings of 53 cents per share on revenue of $2.90 billion before the opening bell.
- Exxon Mobil Corp. (NYSE:XOM) declined 2.38% ahead of its earnings after the closing bell. Analysts expect a quarterly earnings of $1.70 per share on revenue of $86.09 billion.
- RH (NYSE:RH) slumped 26.31% after reporting weaker-than-expected fourth-quarter financial results after the market closed on Wednesday. Its fourth-quarter revenue of $812.41 million, missing the consensus estimate of $829.56 million
- Penguin Solutions Inc. (NASDAQ:PENG) rose 4.60% as it posted better-than-expected results for its second quarter on Wednesday. The company said it sees FY25 net sales growth of 17% year-over-year and adjusted EPS of $1.60.
- Genasys Inc. (NASDAQ:GNSS) surged 41.55% after receiving $2.5 million worth of LRAD orders from the U.S. Military for Army, Navy, and Air Force units. LRAD systems provide long-range communication and escalation of force capabilities up to 5,000 meters, and are used globally.
- Tesla Inc. (NASDAQ:TSLA) dropped after Elon Musk clarified his exit from the government’s DOGE as "fake news."
Commodities, Gold, And Global Equity Markets:
Crude oil futures were trading lower in the early New York session by 3.75% to hover around $69.02 per barrel.
Gold Spot US Dollar declined 0.15% to hover around $3,122.96 per ounce. Its fresh record high stood at $3,167.71 per ounce. The U.S. Dollar Index spot was lower by 1.68% at the 102.060 level.
Asian markets closed on a lower note on Thursday. India's S&P BSE Sensex, Japan's Nikkei 225, Australia's ASX 200, China’s CSI 300, Hong Kong's Hang Seng, and South Korea's Kospi index fell. European markets were also lower in early trade.
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