U.S. equity futures moved sharply lower in early Thursday trading amid a global government bond market selloff and slumping tech stocks as investors continue to navigate a backdrop of tariff uncertainty and softer economic growth.
Stocks ended higher on Wednesday, with the S&P 500 rally 1.12% into the close of the session following a move by President Donald Trump to carve out a month-long delay on new trade levies to the auto industry, put in place earlier this week, suggesting the White House might be more willing to comprise with other sectors and countries over the coming months.
That optimism appeared to have faded overnight, however, amid the ongoing rise in European government bond yields, tied to Germany’s historic decision to re-write its fiscal rules and commit trillions in spending on defense and infrastructure projects, as well a renewed inflation risk in the U.S. tied to Trump’s trade policies.
The Federal Reserve’s Beige Book, which tracks economic activity around the various central bank regions, showed only “slight’ growth but noted moderate price increases and notably increased mentions of tariffs.
A muted outlook from AI chipmaker Marvell Technologies has tech stocks trading deep in the red Thursday.
Marvell
That report, alongside the extended selloff in German government bonds, lifted benchmark 10-year note yields 5 basis points higher from Wednesday levels to trade at 4.309% heading into the start of the New York Session.
“Steep tariff increases against top US trading partners could create a ‘stagflationary’ shock — a negative economic hit combined with higher inflation — while triggering financial market volatility,” said EY chief economist Gregory Daco.
The U.S. dollar index, meanwhile, which tracks the greenback against a basket of its global peers, fell another 0.17% overnight to trade at 104.220, the lowest since November of last year.
Related: Biggest U.S. bank overhauls stock market outlook amid tariff-linked slump
On the stock side, a solid but unsurprising set of fourth quarter earnings from AI chipmaker Marvell Technology (MRVL) sent shares in the group down 16% in premarket trading, with high beta stocks such as Nvidia (NVDA) , Intel (INTC) and Broadcom (AVGO) following suit.
The moves have set up Wall Street for another opening bell pullback, with futures contracts tied to the S&P 500 suggesting a 94 point decline and those linked to the Dow Jones Industrial Average priced for a 390 point retreat.
Tech stock declines have primed the Nasdaq for an opening bell decline of around 267 points, a move that would extend the benchmark’s year-to-date decline nearer to 4%.
Market volatility gauges remain elevated, however, and big swings are expected over the session and into Friday’s February jobs report, according to the CBOE Group’s VIX index.
Current VIX levels of $23.30 suggest daily moves of around 1.46%, or 85 points, for the S&P 500 over the next thirty days.
More Wall Street Analysis:
Analyst says AI stock picked by Cathie Wood will surgeAnalysts make surprise move on MongoDB stock price targetAnalysts reboot Rocket Lab’s stock price target after earnings
In overseas markets, European stocks turned lower heading into the European Central Bank’s policy decision later this morning in Frankfurt. The ECB is expected to lower its key deposit rate by 25 basis points, to 2.5%, but further moves are likely to be complicated by trade war risks and the impact of German’s hefty fiscal spending increase.
Overnight in Asia, yesterday’s tariff relief lifted stocks in the region, with % the Nikkei 225 rising 0.77% on the session and the regional MSCI ex-Japan benchmark rising 1.23% into the close of trading.
Related: Veteran fund manager unveils eye-popping S&P 500 forecast
