Dow Jones futures jump after Trump signals possible tariff rollback

Dow Jones futures rose 0.4% early Wednesday, alongside increases in S&P 500 and Nasdaq futures, following President Donald Trump’s address to Congress where tariffs were a focal point. A top Trump official stated that tariffs on Mexico and Canada could be quickly adjusted.

The stock market experienced significant volatility on Tuesday, with major indexes ultimately declining. Nvidia (NVDA) and Super Micro Computer (SMCI) experienced rebounds, although the overall sentiment remains cautious.

Following comments made by Commerce Secretary Howard Lutnick, Dow futures rose as Trump indicated a potential rollback of tariffs on Mexico and Canada. The 10-year Treasury yield increased to 4.23%. Chinese stocks also gained after the government set a 5% GDP growth target for 2025, signaling a plan for increased deficit spending to boost domestic demand amid ongoing trade tensions.

In his address, Trump emphasized economic recovery as a priority and reiterated his tariff policy: “Whatever they tariff us, we tariff them,” noting that tariffs might cause a “little disturbance” but asserting that the country was “OK with that.” The U.S. has recently imposed 25% tariffs on imports from Canada and Mexico and an additional 10% on Chinese goods, signaling escalating trade war tensions.

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Investors have been urged to adopt a defensive posture in the current turbulent market. The major stock indexes have all seen sharp declines, with the Dow Jones Industrial Average dropping 1.55% and the S&P 500 losing 1.2%. The Nasdaq composite ended down 0.35%, failing to recover its 200-day moving average, while the small-cap Russell 2000 hit its lowest levels in nearly seven months. Despite the downturn, some defensive sectors, including healthcare and fast food, are performing better.

In corporate earnings, CrowdStrike, Credo Tech Group (CRDO), and Box (BOX) reported results after the market closed. CrowdStrike’s stock fell in after-hours trading despite surpassing earnings expectations while providing mixed guidance. CRDO’s stock also declined following its earnings report. Box’s earnings were in line with expectations, but its subdued guidance resulted in a significant drop in share price.

On the commodity front, U.S. crude oil prices dipped by 0.2% to $68.26 per barrel. Meanwhile, the 10-year Treasury yield observed a slight increase, reverting from a low of 4.11% during the day.

Markets in Asia responded positively to Lutnick’s comments regarding tariffs, with the Hang Seng index in Hong Kong rising 2.6% and other major Asian markets showing gains. The Chinese government’s reaffirmation of its economic growth targets also bolstered market sentiment.

The market remains in a correction phase, with volatility expected to continue as traders assess ongoing economic data and potential policy changes from the Trump administration. Upcoming key events include employment figures and Federal Reserve commentary that may further impact market dynamics.

Featured image credit: Pedro Lastra/Unsplash