TLDR
- US stock futures dropped sharply following disappointing earnings from Marvell and Macy’s
- Investors are concerned about President Trump’s shifting tariff policies, with a one-month pause on auto tariffs for Mexico and Canada
- Tech stocks led the retreat with Marvell shares falling over 16% in premarket trading
- Trade war uncertainty continues as Canada and China imposed retaliatory tariffs
- Economic reports and rising layoffs have heightened fears about US economic growth slowing
US stock futures dropped sharply on Thursday as investors grappled with President Trump’s evolving tariff policies and disappointing earnings reports from major companies. The market reaction shows how trade tensions and tech sector concerns are influencing Wall Street sentiment.
Dow Jones Industrial Average futures fell roughly 400 points, representing a 1.1% decline. S&P 500 futures dropped 1.4% while the tech-heavy Nasdaq 100 futures lost 1.7%. This pullback erased much of Wednesday’s gains that came after a temporary tariff exemption announcement.
The tech sector led the retreat following Marvell Technology’s weaker-than-expected quarterly sales forecast. Investors had hoped for stronger results from the chipmaker’s AI-related business. Marvell shares plunged more than 16% in premarket trading.
Other semiconductor companies faced selling pressure too. Industry giants like Nvidia, Broadcom, AMD, ON Semiconductor, and Taiwan Semiconductor all lost ground before the market opened. This selling reflects broader concerns about the AI growth story that has powered tech stocks for over a year.
Worries about AI growth have troubled tech investors since the arrival of DeepSeek. These concerns grew after a wave of cheaper Chinese AI models entered the market. Trump’s threat to eliminate CHIPS Act funding has added to the uncertainty in the semiconductor industry.
Trade tensions remain at the forefront of market concerns. The Trump administration’s tariffs on Canadian, Mexican, and Chinese imports took effect earlier this week. This policy move has caused turmoil across global markets.
Both Canada and China responded quickly with retaliatory tariffs of their own. Mexico announced it would reveal its countermeasures over the weekend. The back-and-forth nature of these trade actions has created an unpredictable environment for businesses and investors.
In a move that temporarily calmed markets Wednesday, the White House announced a one-month delay for tariffs on automakers. This exemption applies to cars that comply with the United States-Mexico-Canada Agreement (USMCA). However, the short duration of this pause left many questioning its value.
As Adam Crisafulli of Vital Knowledge noted, “Exempting auto makers for just one month from draconian tariffs is like putting a Band-Aid on a bullet wound.” He pointed to the “torrent of trade/tariff announcements planned by the White House in the coming months” as an ongoing concern.
The retail sector also contributed to market weakness
The retail sector also contributed to market weakness. Macy’s shares declined after the company issued a weak outlook. The retailer cited tariff headwinds as a factor impacting its business forecast.
Meanwhile, Walmart has reportedly asked its Chinese suppliers to make substantial price cuts. According to Bloomberg, this request comes as a direct response to the new tariff situation. Large retailers are scrambling to manage the impact on their supply chains.
Economic data released Thursday added to investor worries. Challenger, Gray & Christmas reported that layoff announcements have soared to levels not seen since 2020. The outplacement firm attributed this spike partly to efforts by Trump and Elon Musk to reduce the federal government workforce.
Recent reports from the Federal Reserve and the Institute for Supply Management have highlighted fears about rising input costs due to tariffs. These concerns come as markets await Friday’s monthly jobs report, which could provide crucial insights into the health of the US economy.
Investors worried about stagflation
Investors are increasingly worried about stagflation. This economic condition combines slow growth with persistent inflation. A run of soft economic data has fed speculation that US economic growth may be stalling just as tariffs threaten to push prices higher.
The weekly update on jobless claims released Thursday will set the stage for Friday’s employment report. This data will be closely watched for signals about the Federal Reserve’s interest rate policy. Many investors hope that signs of economic cooling will prompt the Fed to cut rates soon.
The major market averages have lost more than 1% this week as trade tensions have escalated. Thursday’s selling suggests that investors remain cautious about the economic outlook amid policy uncertainty and disappointing corporate results.
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