US Stock Futures Waver After Two-Day Rally: Trump's Tariff Moves Could End A 3-Year 'Rolling Recession,' Says Expert

U.S. stock futures were volatile on Tuesday following a two-day advance. Futures of major benchmark indices were mixed in premarket.

Donald Trump hinted at helping the car companies while talking to reporters in his Oval Office on Monday. He explained that automakers require a transition period to shift production from Canada, Mexico, and elsewhere.

“And they need a little bit of time because they're going to make them here, but they need a little bit of time. So I'm talking about things like that,” he said.

Stocks advanced for two consecutive days after he exempted smartphones, computers, and semiconductors from the reciprocal tariffs on Friday. However, he hinted that he may look at levying duties on the chips imported into the U.S. on Sunday in a Truth Social post.

The 10-year Treasury bond yielded 4.38% and the two-year bond was at 3.86%. The CME Group's FedWatch tool‘s projections show markets pricing an 82.7% likelihood of the Federal Reserve keeping the current interest rates unchanged in its May meeting.

The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, rose in premarket on Tuesday. The SPY was up 0.013% to $539.19, while the QQQ advanced 0.22% to $458.47, according to Benzinga Pro data.

Cues From Last Session:

Led by technology stocks, U.S. equities closed higher on Monday. Apple Inc. (NASDAQ:AAPL) shares surged 2.2%, and Dell Technologies Inc. (NYSE:DELLL) gained approximately 4%, contributing to a roughly 1% rise in the Technology Select Sector SPDR Fund (NYSE:XLK).

Financials presented a mixed picture, with Goldman Sachs Group Inc. (NYSE:GS) reporting stronger-than-anticipated first-quarter earnings, while M&T Bank Corporation (NYSE:MTB) posted weaker-than-expected results.

Real estate, utilities, and consumer staples sectors recorded the most significant gains on Monday. Conversely, consumer discretionary stocks trended lower.

As of Monday’s close, the Dow Jones index was 10.1% lower than its 52-week high of 45,073.63 points. The S&P 500 index was 12.06% lower than its previous high of 6,147.43 points, and the Nasdaq 100 index was down 15.42% from its last record high of 22,222.61 points.

The Dow Jones index climbed 312 points or 0.78% to 40,524.79, whereas the S&P 500 index advanced 0.79% to 5,405.97. Nasdaq Composite rose to end 0.64% higher at 16,831.48, and the small-cap gauge, Russell 2000, jumped 1.11% to 1,880.88.

Insights From Analysts:

Ark Invest CEO Cathie Wood said that she sees a “light at the end of the tunnel,” despite the ongoing tariff turmoil. According to Wood, tariffs could be the catalyst to end a three-year "rolling recession."

She said that Trump’s decision to bring Treasury Secretary Scott Bessent into the process indicates a move to reduce both tariffs and non-tariff trade obstacles. She contends this shift wouldn’t have occurred without the initial “shock therapy” of aggressive trade measures.

The slowdown caused by the tariff introduction will give the administration and the Federal Reserve "more degrees of freedom to stimulate than most investors have been expecting,” she said.

This will create a "clarion call" for tax cuts, deregulation, and lower interest rates, ultimately paving the way for economic recovery, Wood added.

The analysts at BlackRock extended their tactical horizon back to six to 12 months and resumed their positive view on U.S., while still expecting the “ongoing risk asset volatility and potentially sharp reversals.”

Spiking yields in long-term U.S. Treasuries seemed to be a factor in the change in tariff tactics, the weekly note stated.

“We stay underweight long-term Treasuries, our highest conviction view: tariffs are likely to add to already sticky inflation, and congressional budget plans last week reinforce the outlook for persistent budget deficits. We favor gold instead as a portfolio diversifier.”

According to BlackRock, the broad-based equity selloff has created opportunities to tap into certain sectors, and “selectivity is key.”

“We still like U.S. technology benefitting from the AI buildout and adoption. We also favor global banks. That includes U.S. banks given the scope for deregulation even with some potential economic pain.”

See Also: How to Trade Futures

Upcoming Economic Data

Here’s what investors will keep an eye on Tuesday:

• March’s import price index data and April’s Empire State manufacturing survey data will be released by 8:30 a.m. ET.

Stocks In Focus:

• Citigroup Inc. (NYSE:C) rose 1.09% in premarket on Tuesday as it is expected to report earnings before the opening bell. Analysts expect a quarterly earnings of $1.85 per share on revenue of $21.29 billion.

• Johnson & Johnson (NYSE:JNJ) was down 0.29% as Wall Street expects it to report earnings of $2.60 per share on revenue of $21.58 billion before the opening bell.

• Bank of America Corp. (NYSE:BAC) was up 0.76% as it is expected to report earnings before the opening bell. Analysts expect a quarterly earnings of 82 cents per share on revenue of $26.99 billion.

• United Airlines Holdings Inc. (NASDAQ:UAL) declined 0.12% as Wall Street expects it to report earnings of 76 cents per share on revenue of $13.26 billion after the closing bell.

• Telefonaktiebolaget LM Ericsson ADR (NASDAQ:ERIC) jumped 6.17% after reporting that its first-quarter adjusted operating earnings, excluding restructuring charges, jumped 44% year-over-year to 6.2 billion Swedish crowns ($636 million).

• Lowe’s Companies Inc. (NYSE:LOW) advanced by 0.58% as it announced the purchase of an interior design company, Artisan Design Group, for $1.3 billion.

• ARB IOT Group Ltd. (NASDAQ:ARBB) surged 33.83% after securing a $53 million deal to provide AI servers to Whizzl Group, boosting its AI infrastructure presence and strengthening its position in the AI and data center markets.

• Geovax Labs Inc. (NASDAQ:GOVX) slumped 34.57% after it was directed by the Biomedical Advanced Research and Development Authority on April 11 to halt its Phase 2b COVID-19 vaccine trial.

Commodities, Gold, And Global Equity Markets:

Crude oil futures were trading lower in the early New York session by 0.29% to hover around $61.35 per barrel.

Gold Spot US Dollar advanced 0.46% to hover around $3,223.97 per ounce. Its fresh record high stood at $3,245.84 per ounce. The U.S. Dollar Index spot was lower by 0.06% at the 99.585 level.

Asian markets rose on Tuesday, including India's S&P BSE Sensex, China’s CSI 300, Hong Kong's Hang Seng, Japan's Nikkei 225, Australia's ASX 200, and South Korea's Kospi index. European markets were also higher in early trade.

Read Next:

• Cathie Wood Says ‘Shock Therapy’ From Trump’s Trade Moves May End Prolonged Economic Slump

Image Via Shutterstock