TLDR
- Dow futures down 0.5%, S&P and Nasdaq futures falling 0.6% as Treasury yields rise
- Republican tax bill advancing, potentially adding $3.3 trillion to deficit over a decade
- US-China trade truce appears fragile with ongoing verbal disputes
- Chinese shipments of Apple devices to US hit lowest level since 2011 in April
- Port of Los Angeles saw shipments drop by 30% in early May due to tariffs
US stock futures pointed to losses early Wednesday as Treasury yields climbed amid debates over a new Republican tax bill. The Dow Jones Industrial Average futures dropped 201 points (0.5%), while S&P 500 and Nasdaq 100 futures both fell 0.6%.
This decline adds to Tuesday’s losses, which ended a six-day winning streak for the S&P 500. The sell-off was led by losses in Big Tech stocks.
Long-term US debt has been under pressure as Congress advances a Republican tax bill that could increase the national deficit by $3.3 trillion over ten years. The benchmark 10-year Treasury yield stood at 4.522% early Wednesday, up from Tuesday’s close.
Meanwhile, the dollar weakened against other currencies. The DXY dollar index fell to 99.65, its lowest level in two weeks.
ING analyst Benjamin Schroeder noted in a research report, “The market discussion can remain centered on the US fiscal trajectory for now. On Wednesday, the Treasury’s 20-year bond sale might get more attention than usual to gauge investor appetite for US credit.”
US-China Trade Tensions
The recent trade truce between the US and China appears to be on shaky ground. Both countries continue to exchange critical statements, with trust issues evident on both sides.
On Wednesday, China’s Commerce Ministry announced plans to take legal action against any organization or individual helping the US discourage the use of Chinese advanced semiconductors. This came after the US Commerce Department warned that using Huawei chips anywhere would violate US export controlsābefore later removing this reference.
The impact of tariffs is becoming clearer through recent trade data. Chinese shipments of Apple’s iPhone and other mobile devices to the US dropped to their lowest level since 2011 in April, showing how US tariffs have disrupted trade between the world’s two largest economies.
Economic Impacts Become Visible
The Port of Los Angeles, America’s busiest container hub, reported a 30% drop in shipments in early May as President Trump’s tariffs took effect. Importers and retailers with ties to China were hardest hit.
Business leaders have been vocal about their concerns. JPMorgan CEO Jamie Dimon warned Monday that markets are underestimating the long-term impact of tariffs, describing the current duties as “pretty extreme.”
Citigroup’s Jane Fraser shared similar concerns, noting that companies are delaying investments due to tariff uncertainty. Last week, Walmart previewed coming price increases, prompting President Trump to tell the company to “eat the tariffs.”
The Trump administration has increased its tough talk in recent days. Treasury Secretary Scott Bessent said Sunday that tariff rates will return to “reciprocal” levels if countries don’t make trade deals with the US during the current 90-day pause.
“President Trump has put them on notice that if you do not negotiate in good faith, you will ratchet back up to your April 2 level,” Bessent told CNN. He highlighted that the US is prioritizing trade deals with 18 key partners.
President Trump stated Friday that the US will set tariff rates for trading partners in the coming weeks. He explained that his administration cannot negotiate trade deals with all countries simultaneously due to limited capacity.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
