U.S. stock index futures rose on Sunday evening, rebounding from recent losses. The gains were fueled by dip-buying after President Donald Trump announced plans to impose more tariffs on steel and aluminum imports. However, the rise was tempered by caution ahead of important inflation data scheduled for release later this week.
Trump’s Tariff Threat and Market Reaction
Initially, futures dropped in response to Trump’s tariff comments. However, the losses were mostly reversed as investors speculated that the President might use the tariffs as a negotiation tool rather than a long-term policy. Wall Street also saw some buying interest after sharp declines on Friday, when Trump signaled intentions to impose tariffs on U.S. imports, aiming to match the levies placed by U.S. trading partners on American goods.
By 19:34 ET (00:54 GMT), S&P 500 Futures were up 0.3% at 6,064.25 points, while Nasdaq 100 Futures gained 0.4% to 21,668.25 points. Dow Jones Futures rose 0.1% to 44,481.0 points.
Trump to Announce New Tariffs on Steel and Aluminum
On Sunday, President Trump confirmed he would announce a 25% tariff on all steel and aluminum imports to the U.S. on Monday. This follows the implementation of 10% tariffs on China just days earlier. These new tariffs will be in addition to existing duties on steel and aluminum, which were imposed during Trump’s first term and maintained by the Biden administration, albeit at lower levels.
The tariffs are expected to affect imports from Canada, Brazil, and Mexico the most, as these countries are the largest steel exporters to the U.S. Canada is also the largest aluminum exporter to the U.S.
Despite the potential impacts, some investors hoped Trump might offer relief to Canada and Mexico. Last week, he delayed plans to impose 25% tariffs on these two countries, given their critical role in U.S. supply chains. During his first term, Trump had offered tariff exemption quotas to several U.S. allies.
Plans for Reciprocal Tariffs
Trump reiterated on Sunday his plans to impose reciprocal tariffs on major U.S. trading partners to counter what he has previously described as unfair trading practices. These plans, first mentioned on Friday, contributed to sharp losses on Wall Street.
On Friday, the S&P 500 dropped nearly 1% to 6,025.99 points, while the NASDAQ Composite fell 1.4% to 19,523.40 points. The Dow Jones Industrial Average also sank 1% to 44,303.40 points.
Inflation and Earnings in Focus
Analysts and Federal Reserve officials have raised concerns that Trump’s tariffs, which will ultimately be paid by U.S. importers, could drive up inflation in the coming months. This makes the upcoming U.S. consumer price index (CPI) data for January, due on Wednesday, especially important. The CPI is expected to show that inflation remains persistent.
Sticky inflation could limit the Federal Reserve’s ability to cut interest rates, a situation highlighted in January when the central bank opted to keep rates unchanged.
In addition to inflation data, several major companies are set to report earnings this week. McDonald’s, Vertex Pharmaceuticals, Coca-Cola, and S&P Global are among the firms scheduled to release their quarterly results in the coming days.
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