U.S. stock futures rebounded on Tuesday night, following a second day of sharp losses for major indices, as investors reacted to statements suggesting a potential resolution to the ongoing tariff disputes.
Futures for the Dow Jones Industrial Average rose by 206 points, or 0.5%, while S&P 500 and Nasdaq 100 futures each gained about 0.6%.
Earlier in the day, the Dow plunged 670.25 points, or 1.55%, ending the regular trading session in negative territory. The S&P 500 dropped 1.22%, and the Nasdaq Composite shed 0.35%. At one point, the Nasdaq had fallen over 2%, inching dangerously close to correction territory, which is defined as a 10% decline from its most recent peak.
The market’s decline came amid the official implementation of President Trump’s new 25% tariffs on goods from Canada and Mexico, as well as retaliatory measures from these nations. Additionally, China has responded with a 10% tariff on U.S. goods.
However, hopes for a potential compromise rose after Commerce Secretary Howard Lutnick suggested during an interview on Fox Business that the U.S. might seek a middle ground with Canada and Mexico to resolve the tariff disputes.
“The key takeaway is that uncertainty, introduced by Trump, has a massive impact on the market,” said Michael Green, Chief Strategist at Simplify Asset Management. “A single tweet or information release can drastically shift market sentiment.”
Green also warned that the escalating trade war and retaliatory tariffs could negatively affect the broader economy, though he acknowledged the long-term effects remain uncertain.
“This could lead to a forced savings environment, harming employment and wealth,” Green said, noting that these potential consequences are influencing market behavior.
Wednesday’s economic data releases, including the ADP private payrolls report for February and the purchasing managers’ index for last month, could provide further insight into the health of the U.S. economy. In addition, several companies are set to report quarterly earnings, including Thor Industries, Abercrombie & Fitch, Campbell’s, and Brown-Forman.
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