Stock futures pointed to a bounce for Wall Street on Tuesday, a day after a sharp escalation in U.S-China trade tensions triggered the worst day for major indexes since early January.
How are benchmark indexes faring?
Dow Jones Industrial Average futures YMM9, +0.47% rose 121 points, or 0.5%, to 25,402, while S&P 500 futures ESM9, +0.59% rose 15.65 points, or 0.6%, to 2,822.50. Nasdaq-100 futures NQM9, +0.82% gained 49 points, or 0.7%, to 7,364.25.
On Monday, The Dow Jones Industrial Average DJIA, -2.38% tumbled 617.38 points, or 2.4%, to 25,324.99 and the S&P 500 SPX, -2.41% dropped 69.53 points, or 2.4%, to 2,811.87 on Monday, the worst session for those indexes since Jan. 3. The Nasdaq Composite Index COMP, -3.41% sank 269.92 points, or 3.4%, to 7,647.02, marking its biggest one-day loss for 2019.
What’s driving the market?
The start of the week was marked by a ramp up in trade tensions, after China fired back at U.S. tariffs with retaliatory duties that could reach 25% on $60 billion in annual U.S. exports. That was after the U.S. last week raised tariffs on $200 billion in annual Chinese imports to 25% from 10%, and threatened more following talks that ended Friday between the two countries without a deal.
Investors are worried that an escalating fight between the two could harm the U.S., Chinese and global economies.
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But some calm appeared to return to markets Tuesday after President Donald Trump said late Monday that it should be clear in “three or four weeks” if a U.S. delegation’s recent trip to China to discuss trade was successful. “I have a feeling it’s going to be very successful,” he added.
Stocks also came off session lows Monday after Trump said he would meet Chinese President Xi Jinping next month at a Group of 20 summit, and that no decision had been made on whether to impose tariffs on another swath of Chinese goods.
Investors will look out for a small batch of Federal Reserve officials due to speak Tuesday. New York Fed President John Williams will speak on the international monetary system in Switzerland at 3:15 a.m. Eastern, following by Kansas City Fed President Esther George at the Economic Club of Minnesota in Minneapolis, MN at 12:45 p.m. Eastern and San Francisco Fed President Mary Daly at Northwestern University in Evanston, IL at 6 p.m. Eastern.
What are strategists saying?
“The next key thing to look for is whether Xi and Trump talk on the phone at some point and try to get talks back on track. However, our concern is that it will require financial stress to create the necessary pressure to get the deal done,” said analysts at Danske Bank, in a note to clients.
How are other markets trade?
Asian markets posted modest losses, while Europe stocks also pointed slightly higher.
The U.S. dollar DXY, +0.01% was flat, but the Japanese yen USDJPY, +0.39% remained higher against the dollar, as investors still leaned toward less risky assets. Gold prices GCM9, -0.23% stepped back some, while oil prices CLM9, -0.20% remained higher.
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