TLDR
- US stock futures fell Friday with Dow, S&P 500, and Nasdaq all dropping as markets reacted to mixed Federal Reserve messaging
- The Fed maintained plans for two rate cuts this year but raised inflation forecasts and lowered growth outlooks for 2025
- FedEx shares dropped after cutting its fiscal 2025 forecast due to “weakness in the U.S. industrial economy”
- Markets are concerned about Trump’s additional tariffs set to take effect April 2, though the EU has delayed retaliatory tariffs on US whiskey
- Oil prices dipped Friday but remained on track for second consecutive weekly gains amid new US sanctions against Iran and OPEC+ production cuts
US stock futures fell Friday as investors processed mixed signals from the Federal Reserve while bracing for upcoming tariffs. The market reaction comes as FedEx slashed its annual outlook, citing economic weakness.
The drop in futures affected all major indexes. Dow Jones Industrial Average futures dipped 0.3% while S&P 500 futures dropped by the same amount. Nasdaq Composite futures fell further, decreasing by 0.4%.
This decline follows a brief rally after the Fed’s Wednesday decision. Markets initially responded well to the central bank maintaining its plan for two interest rate cuts this year. However, sentiment quickly soured as investors took a deeper look at the details.
The S&P 500 and Nasdaq have both entered correction territory. They’re trying to break four-week losing streaks in what has been a tough start to 2025. The Nasdaq is heading for its fifth straight losing week, the longest stretch since May 2022.
Federal Reserve Updates Create Market Uncertainty
The Fed kept interest rates unchanged as most expected. But the central bank also raised its inflation forecast while cutting its growth outlook for 2025. This mixed message added to market anxiety.
Fed Chair Jerome Powell tried to calm markets. He stated that the economic impact of Trump’s trade policies seemed “manageable” and that recession risks remain low. Powell also described inflation risks as “transitory.”
Some analysts raised concerns about Powell’s wording. The last time the Fed used the term “transitory” for inflation, it led to the most aggressive rate-hike campaign in decades. This history has made investors wary.
Despite maintaining projections for at least 50 basis points of rate cuts this year, the Fed’s higher inflation expectations cast doubt on this outlook. The central bank now expects inflation to trend further above its 2% target through the year.
Tariff Concerns Loom Over Markets
President Trump’s additional tariffs are set to take effect on April 2. This deadline is less than two weeks away, adding urgency to market concerns. Trump has given himself broad leeway to negotiate with countries, which adds to Wall Street’s uncertainty.
There was one positive development on the trade front. The European Union delayed imposing retaliatory tariffs on US whiskey. This move is meant to buy time for discussions between Brussels and Washington, potentially avoiding a damaging trade conflict.
The Fed acknowledged uncertainty about how Trump’s tariffs will impact the US economy. They expressed special concern about potential effects on inflation. This uncertainty has kept markets on edge.
Corporate News Adds to Market Pressure
FedEx shares fell sharply in premarket trading. The delivery giant cut its annual profit and revenue outlook due to “continued weakness and uncertainty in the U.S. industrial economy.” This news fueled fears about slowing industrial demand.
Nike also delivered disappointing news. Their fiscal fourth-quarter revenue estimate came in below analysts’ expectations. This sent shares in the shoe retailer down before the bell.
Tesla electric vehicles showed an interesting trend. The number of Tesla EVs traded in this month is on pace to hit a record high, according to data from car shopping website Edmunds.
Oil Markets Show Resilience
Oil prices slipped Friday but remained on course for weekly gains. Both Brent crude and West Texas Intermediate were tracking toward roughly 2% increases for the week, their biggest weekly gains since early 2025.
The US issued new sanctions against Iran on Thursday. These target an independent Chinese refinery and several oil tankers that Washington claims are part of Iran’s “shadow fleet” of vessels.
OPEC+ announced that seven member states will cut output to make up for recent production increases. The plan includes monthly cuts between 189,000 and 435,000 barrels per day, lasting until June 2026.
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