S&P 500: Tech Stocks Tumble and Volatility Rises on Trump Tariff Reports

Stock Futures Decline as Tech Sell-Off and Tariff Concerns Weigh on Markets

U.S. stock futures slipped Wednesday during the pre-market session as investors reacted to renewed uncertainty surrounding potential tariffs and a sharp sell-off in tech stocks. Futures declined following reports that President-elect Donald Trump may invoke a national economic emergency to impose broad tariffs, amid concerns about persistent inflation complicating the outlook for interest rate cuts.

At 13:10 GMT, Dow Futures are trading 42700.00, down 103.00 or -0.24%. S&P 500 Index Futures are at 5932.75, down 21.50 or -0.36% and Nasdaq 100 Index Futures are trading 21255.50, down 104.25 or -0.49%.

How Are Tariff Concerns Impacting Markets?

Stock futures dipped after CNN reported Trump’s possible use of the International Economic Emergency Powers Act (IEEPA) to justify widespread tariffs. The move would grant the president unilateral control over imports during a national emergency. Trump’s prior use of IEEPA in 2019 to pressure Mexico over immigration set a precedent, leaving market participants wary of implications for sectors reliant on international supply chains.

How Are Bond Yields Responding to Economic Data?

Treasury yields approached multi-month highs, with the 10-year note at 4.681%, following stronger-than-expected U.S. services data suggesting persistent inflation. This reinforced expectations that the Federal Reserve will maintain elevated rates, with futures showing a 95% probability of steady rates at this month’s meeting. Yields have also climbed on speculation that Trump’s tariff plans could spur inflation.

Which Stocks Are Leading Declines?

Tech stocks are leading the sell-off, with Palantir sliding 3% in premarket trading, extending its three-day decline. Advanced Micro Devices dropped nearly 3% following an HSBC downgrade, reflecting broader semiconductor sector weakness. The S&P 500 and Nasdaq both closed sharply lower on Tuesday, pressured by rising bond yields and strong services sector data.

What Economic Reports Are Traders Watching?

Investors await ADP private payrolls and jobless claims data, along with the Fed’s December meeting minutes, for insights into the central bank’s outlook. The recent ISM services report highlighted rising prices, reinforcing inflation concerns while maintaining some optimism about long-term growth prospects.

What’s the Market Forecast Moving Forward?

Markets are expected to remain volatile as traders evaluate Trump’s potential tariff plans alongside economic data. The possibility of a national economic emergency declaration introduces uncertainty, potentially pressuring sectors with significant global exposure while benefiting domestic-focused industries. Bond yields are likely to stay elevated, reflecting inflation concerns and skepticism over near-term rate cuts. The market outlook will depend heavily on upcoming economic reports and the Fed’s interpretation of inflationary risks.

More Information in our Economic Calendar.