Dow futures plunged over 360 points on Tuesday, reflecting a cautious mood on Wall Street ahead of the start of Q3 earnings.
The renewed US-China tensions seem to be also weighing on the market sentiment, as nothing really came out of US President Donald Trump’s assurances around mending ties with China.
Overnight, Beijing imposed new shipping sanctions in retaliation for US policy moves, sending ripples through global equity markets and keeping traders on edge.
5 things to know before Wall Street opens
1. The US government shutdown entered its 14th day on Tuesday, and there are no signs of resolution so far.
The Democrats seem adamant on the stand around the extension of Affordable Care Act subsidies, while Republicans are demanding a clean funding bill.
US President Donald Trump has signaled nothing about ending this deadlock, and his administration has even started layoffs in federal ranks.
Nearly 750,000 federal employees are furloughed, with some workers, like military personnel, continuing without pay.
2. Federal Reserve Chair Jerome Powell took the stage on Tuesday at the National Association for Business Economics annual meeting in Philadelphia.
With the US economy showing stronger-than-expected growth, and amid ongoing uncertainties around tariffs and immigration, Powell talked about the tricky balancing act the Fed faces between inflation, jobs, and overall growth.
With a government shutdown delaying some key economic data, investors were hanging on his every word for hints about what the Fed might do next, including a widely anticipated 25 basis-point rate cut later this month.
Powell also pointed out the push-and-pull in the economy: on one hand, productivity is getting a boost from AI investments, but on the other, there are lingering worries about inflation and potential impacts on employment.
3. JPMorgan Chase, Citigroup, and Goldman Sachs are all set to kick off the Q3 earnings season on Tuesday, with investors eagerly awaiting the crucial data.
Analysts forecast a 7.9% year-over-year earnings growth for S&P 500 companies, marking a ninth consecutive quarter of positive earnings.
As per market observers, Q3 earnings are expected to be a bit on the lower side, compared to the last quarter, but still reflect corporate resilience amid economic uncertainties.
Financial institutions will set the tone with their results this week, followed by firms across various sectors such as technology, healthcare, and consumer goods.
4. On Tuesday, premarket trading showed a clear split in the markets.
AI-driven stocks that had been powering the recent rally took a hit after Friday’s sell-off, Nvidia stock and AMD fell more than 2% each, while Tesla and Oracle slipped about 3%.
On the flip side, US rare earth miners were on fire. President Trump’s warning of 100% tariffs on China over its controls on critical minerals sent these stocks soaring: Critical Metals jumped over 27%, USA Rare Earth gained 10%, and MP Materials rose 7%.
Energy Fuels and NioCorp Developments also had strong moves, up 11% and nearly 9%, respectively.
5. The global markets showed mixed performance amid ongoing US-China trade tensions and geopolitical uncertainties.
Asian markets opened cautiously; Japan’s Nikkei fell 0.82% weighed by domestic political uncertainty, while other regional indices experienced a mixed recovery.
Foreign investors largely favored semiconductor exporters linked to AI, supporting inflows into Taiwan and South Korea.
In Europe, markets declined with the STOXX 600 down 0.7%, pressured by renewed trade worries and a sharp drop in Michelin shares after its lowered forecasts.
The UK and German indices also slipped amid economic concerns, while precious metals like gold hit record highs as investors sought safe havens.
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