U.S. stock futures fell on Tuesday as investors awaited the Federal Reserve meeting to kick off. They were gauging the impact of President Trump’s tariffs on their decision-making and the path of interest rates. S&P 500 futures slid 0.7%, while Dow Jones Industrial Average futures dropped roughly 0.6%. Contracts on the tech-heavy Nasdaq 100 led the way lower, falling almost 1%.
Per the @WSJ : “The S&P 500 just wrapped up a nine-day streak of gains—its longest since 2004—rising around 10% to erase the sharp losses that followed the president’s unveiling of the tariffs last month. It has now declined just 3.3% for the year.”#economy #markets pic.twitter.com/evTVOsisi2
— Mohamed A. El-Erian (@elerianm) May 4, 2025
The countdown is on Wednesday, when the Fed’s rate decision will be made as policymakers begin their two-day meeting.
Although the central bank will not make any immediate changes, Wall Street will listen closely to Chair Jerome Powell’s comments on how the economy is holding up. The focus is on the Fed’s evaluation of the fallout from Trump’s trade offensive, which has yet to show up in economic data fully.
% of S&P 500 members at a new 3-month high still quiet for now (at just 6%) pic.twitter.com/p1wpyjOFVT
— Liz Ann Sonders (@LizAnnSonders) May 5, 2025
President Trump’s recent remarks dimmed hopes of tariff relief.
Trump said he plans to continue tariffs on products produced outside of the U.S. and indicated he has discussions scheduled with China’s President Xi Jinping this week. Shares of some companies dropped in premarket trading as tariffs loomed.
#MarketAlert | US Markets At Open: S&P 500 opens 0.7% lower, NASDAQ 100 down 0.8%#USA #DowJones #NASDAQ100 #BerkshireHathaway #Berkshire #Skechers pic.twitter.com/HuXTUBw3mN
— ET NOW (@ETNOWlive) May 5, 2025
The Big Three carmakers pulled their 2025 guidance and said they foresee a $1.5 billion hit from auto tariffs. Highlights on Tuesday’s earnings docket include chipmaker AMD, server maker Super Micro, and EV company Rivian.
The steep recovery in equity markets over the past two weeks is typical of bear market rallies, and the erratic swings mean almost every investor will experience pain, whichever direction the market suddenly moves.
Goldman Sachs Group strategist Peter Oppenheimer said, “The asymmetry for equity investing is poor. Sharp rallies within bear markets are the norm, not the exception.
Stocks To Watch | 📊Ready, set, trade! Keep an eye on these stocks as they set the market abuzz #StockMarket pic.twitter.com/T9mHYGqBBY
— ET NOW (@ETNOWlive) May 5, 2025
The most significant market driver is still uncertainty, with no real long-term bullish or bearish conviction seen from investors. Price action is mainly fueled by short-term headlines and guesswork on how the quickly evolving U.S. tariffs story will affect corporate earnings and resetting valuations.
Fed meeting impacts markets
If the tariff announcements are reversed quickly with little lasting economic damage, this does suggest that the downside risks are limited. Nonetheless, we also think the upside is limited at current valuations,” Oppenheimer wrote in a note.
Investing becomes far more difficult in such a regime, when both upside and downside are limited, and decision-making is caught in foggy headline risk. Market participants must choose between chasing a fading rally and risking exiting too late or missing out entirely on another squeeze higher. They want to avoid pitfalls in a tricky macroeconomic environment while still capturing opportunities.
A wave of dollar selling in Asia is an ominous sign for the greenback as the world’s export powerhouse starts questioning a decades-long trend of investing its big trade surpluses in U.S. assets. Ripples from Friday and Monday’s record rally in the Taiwan dollar are now spreading outward, driving surges in Singapore, South Korea, Malaysia, China, and Hong Kong currencies. The moves suggest that money is moving into Asia at a scale and that a key pillar of dollar support is wobbling.
While Tuesday brought a measure of stability, Hong Kong’s dollar was testing the strong end of its peg, and the Singapore dollar soared close to its highest in more than a decade. Chinese shares advanced on their return from a five-day holiday, aided by signs of easing trade tensions with the U.S. and data showing resilient domestic consumption. The onshore benchmark CSI 300 Index ended 1% higher on Tuesday, with telecom and technology names among the top gainers.
An index of small-cap stocks rallied 3.3% to close at a one-month high. The gains came after Treasury Secretary Scott Bessent said the U.S. could see some “substantial progress in the coming weeks” in trade talks with China. Palantir Technologies Inc.
The stock dropped 9.2% in after-hours trading following earnings reports that did not meetWall Street’s expectations.
