By David Uberti and Ryan Dezember
Stock futures fell and oil prices rose Sunday after the U.S. imposed sweeping tariffs on imports from major trading partners, jolting Wall Street's outlook for the American economy.
Futures linked to the tech-heavy Nasdaq Composite led the declines, falling by more than 2%, while the S&P 500 slipped by 1.7%. Dow Jones Industrial Average futures slid by about 1.1%, or around 500 points. Changes in futures prices don't always reflect market moves after the opening bell.
"Markets are likely to take the announcement of sudden tariffs poorly," TD Securities told clients Sunday night, "with risk assets caught in the cross-hairs."
While major indexes remain near record highs, Sunday's selloff offered an early glimpse of Wall Street's response to President Trump's threatened trade wars becoming reality. Until recently, many on Wall Street saw threats of the U.S. imposing the highest tariffs in decades as a negotiating tactic in border disputes over drug trafficking and migration and unlikely to materialize.
But the Trump administration in recent days has said 25% tariffs on goods from Canada and Mexico, as well as a 10% levy on Chinese imports, will begin Tuesday. Even Canadian energy supplies, including cheap crude funneled to Midwestern refineries, will face a 10% duty.
Benchmark U.S. crude futures rose by more than 2% on Sunday night, trading around $74 a barrel.
Investors have struggled to gauge the potential fallout from trade disputes in part because the scope of retaliation by other countries is unclear.
Canadian Prime Minister Justin Trudeau this weekend said his country would counter by hitting $105 billion of American goods with 25% tariffs starting Tuesday. A list of more than 1,000 initial targets ranged from cigarettes and whiskey to motorcycles and guns, with subsequent duties anticipated for cars, steel and aluminum. Mexico's response is expected on Monday.
Wall Street is particularly concerned about potential tit-for-tat measures by China. Any attempt to protect the country's manufacturers by weakening the yuan "can have reverberations across the market," Goldman Sachs told clients, "but again the state of negotiations and potential for a quick reversal makes this more uncertain."
On Sunday, the value of the U.S. dollar climbed against a basket of foreign currencies, trading at some of its highest levels since the Federal Reserve in 2022 began lifting interest rates to tamp down inflation. The greenback's move promises to pressure many companies that sell goods or services abroad.
Write to David Uberti at david.uberti@wsj.com and Ryan Dezember at ryan.dezember@wsj.com
(END) Dow Jones Newswires
February 02, 2025 19:09 ET (00:09 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
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