U.S. stock index futures remained mostly unchanged on Sunday evening, following sharp declines on Wall Street last month. Investor sentiment remained cautious as the market awaited the impact of upcoming tariffs set to be imposed by President Donald Trump.
The latest data, showing a modest rise in inflation and a dip in consumer sentiment, added to the uncertainty surrounding the Federal Reserve’s future rate decisions. These developments left investors analyzing how they might influence the broader economic outlook.
S&P 500 Futures edged up by 0.1%, reaching 5,979.00 points, while Nasdaq 100 Futures also saw a 0.1% increase, rising to 20,941.25 points. Meanwhile, Dow Jones Futures remained flat at 43,897.0 points by 18:34 ET (23:34 GMT).
Trump Tariffs Set to Take Effect
U.S. Commerce Secretary Howard Lutnick recently stated in an interview on Fox News that tariffs on imports from Mexico and Canada are scheduled to go into effect on Tuesday, March 4, 2025. While the initial proposal included a 25% tariff, Lutnick noted that President Trump will decide the exact tariff levels on the day of implementation.
Additionally, Trump is expected to introduce a 10% tariff on Chinese imports, further intensifying trade-related uncertainty.
Stock Market Declines Amid Tariff Volatility
Major stock indexes took a hit in February, primarily due to volatility sparked by concerns about the upcoming tariffs and shifts in expectations regarding artificial intelligence technology.
The NASDAQ Composite saw a significant 4% drop last month, while the S&P 500 fell by 1.5%, and the Dow Jones Industrial Average declined by 1.6%.
US Economy Faces Challenges in 2025
The U.S. economy entered 2025 on a weaker footing than anticipated. The Federal Reserve had implemented a series of 100-basis-point interest rate cuts last year, but it signaled a more hawkish stance in December due to persistent inflationary pressures.
Recent data released on Friday showed that the Personal Consumption Expenditures (PCE) price index rose by 0.3% in January, maintaining the same rate as December. Year-over-year, the PCE index showed a 2.5% increase, slightly slower than the 2.6% rise in December.
Core inflation, excluding food and energy, also grew by 0.3% in January, with the annual rise decreasing to 2.6% from 2.9% in December.
Despite these slightly positive inflation trends, consumer sentiment declined by 0.2% in January, marking the first drop in nearly two years. Factors contributing to this decline included potential new tariffs and high inflation, which dampened consumer confidence and spending.
The Atlanta Federal Reserve now forecasts a 1.5% annualized growth rate for the U.S. economy in the first quarter of 2025, down from the 2.3% growth recorded in the fourth quarter of 2024.
Economic Outlook: Weaker Growth and Consumer Confidence
Analysts from ING pointed out that the U.S. economy started 2025 on weak footing. The impact of President Trump’s policy actions has already been felt, with weaker consumer confidence and reduced spending, alongside fears of looming tariffs.
“The combination of easing inflation and declining consumer sentiment presents a complex economic landscape,” ING analysts wrote in a recent note, noting that the threat of tariffs is contributing to a sense of uncertainty among both consumers and businesses.
The coming week will be crucial in shaping investor outlook, with further developments regarding tariffs and the Federal Reserve’s stance likely to drive market sentiment.
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