Dow Jones futures plunged early Thursday, along with S&P 500 futures and Nasdaq futures. They sold off as President Donald Trump unveiled "reciprocal" tariffs vs. the world that were much higher than investors had feared.
That came after the stock market whipsawed for solid gains in Wednesday's regular session.
Dow Jones Futures Today
Dow Jones futures fell 2.8% vs. fair value. S&P 500 futures plunged 3.3%. Nasdaq 100 futures dived 3.7%.
Crude oil futures skidded 6%. OPEC+ agreed to a larger-than-expected May production increase, adding to crude's slide.
The 10-year Treasury yield tumbled to 4.07%.
The U.S. dollar plunged.
The Challenger job-cut report reported 275,240 planned layoffs were announced in March, up 60% from 172,017 in February and the highest since May 2020. Federal job cuts related to Elon Musk's Department of Government Efficiency dominated.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session. That could be especially true in this instance.
Trump Tariffs Bigger Than Feared
President Trump announced a 10% baseline on all imports worldwide. But many key trading partners will face much higher duties, though Trump claimed they don't fully cover what other countries impose in the U.S. via tariffs and nontariff trade barriers.
The U.S. will charge a 34% tariff rate on importers of Chinese goods. That comes to 54%, including on Apple iPhones, following two 10% tariff hikes by Trump earlier this year.
Taiwan, home to Taiwan Semiconductor, will face a 32% tariff. Trump is imposing a 20% tariff on imports from the European Union, 24% on Japan imports and 46% Vietnamese goods.
Trump said the U.S. is charging tariffs that are half of what those counties impose on the U.S. But the U.S. tariffs are actually based on trade deficits. The White House simply took the U.S. goods trade deficit with that country, then divided by its exports to the U.S., and claimed that was the country's effective tariff rate. Trump then imposed half that rate as the U.S. tariff vs. that country.
Meanwhile, the U.S. is imposing tariffs even on countries that it has a trade surpluses with.
The reciprocal tariffs will not added on top of sectoral tariffs. So Taiwan-made chips may not face any new U.S. tariff until semiconductor duties are imposed.
Trump will continue to exempt USMCA-compliant goods from the 25% tariffs imposed on Canada and Mexico. Trump said he won't impose "reciprocal" tariffs on Canada and Mexico for now. So a large number of Canadian and Mexico goods will not face any U.S. tariffs.
The baseline tariffs will kick in on April 5, with the higher "reciprocal" tariffs starting April 9.
President Trump also signed an executive order closing the de minimis loophole, as of May 2, letting the U.S. impose tariffs on low-value packages.
Trump has already hiked tariffs on steel, aluminum, China and many goods from Canada and Mexico. New 25% auto tariffs kick on Thursday.
China vowed countermeasures in response to the latest tariffs. The European Union is planning its own response, "if negotiations fail." Various' countries near-term retaliation — and long-term efforts to reshift trade away from the U.S. — will be key.
Stock Reaction
Taiwan Semiconductor stock, Nvidia, Amazon.com, Apple, On Holding and Walmart were down solidly or sharply overnight, while General Motors also retreated.
Palantir Technologies and Tesla sold off as well. TSLA stock could face more political blowout over tariffs.
Tesla stock was a big winner in Wednesday's session. Q1 deliveries came in well below lowered expectations, but investors cheered a report that CEO Elon Musk could leave DOGE soon.
Here's What's At Stake As Trump's Tariffs Set In
Stock Market Rally Attempt
The stock market tumbled at Wednesday's open, rallied for solid gains, moved back to break-even before finishing the roller-coaster session with solid gains.
The Dow Jones Industrial Average rose 0.6% in Wednesday's stock market trading, back above its 200-day moving average. The S&P 500 index climbed 0.7% after falling and then rising more than 1% intraday. The Nasdaq composite gained 0.9%. The small-cap Russell 2000 jumped 1.65%.
Wednesday marked day three of a stock market rally attempt for the S&P 500 and Nasdaq. Investors can look for a follow-through day as soon as Thursday.
A confirmed market rally would be a bullish signal, but they don't always succeed. The odds of failure would be relatively high given the recent sharp sell-off and headline-driven market environment. The 200-day moving averages could serve as resistance for the S&P 500 and Nasdaq.
There was a move toward risk-on assets well beyond Tesla stock, though Wednesday's gains were broad.
U.S. crude oil prices rose 0.7% to $71.71 a barrel. The 10-year Treasury yield climbed four basis points to 4.2%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF gained 1.1%. The iShares Expanded Tech-Software Sector ETF rose 1.3%, with Palantir stock a major component. The VanEck Vectors Semiconductor ETF advanced 0.75%. Nvidia stock and Taiwan Semi are two huge SMH holdings.
Reflecting more-speculative story stocks, ARK Innovation ETF jumped 2.8% and ARK Genomics ETF soared 3.3%. Tesla stock is the No. 1 holding across ARK Invest's ETFs. Cathie Wood's ARK also owns a lot of Palantir stock.
SPDR S&P Metals & Mining ETF climbed 1%. The Energy Select SPDR ETF edged up 0.1% and the Health Care Select Sector SPDR Fund advanced 0.7%.
The Industrial Select Sector SPDR Fund rallied 0.9%.
The Financial Select SPDR ETF climbed 0.8%.
Time The Market With IBD's ETF Market Strategy
Tesla Deliveries Tumble; Elon Musk To Get Out Of DOGE?
Tesla delivered 336,681 vehicles in Q1, down 13% compared to a year ago and the worst quarterly performance since Q2 2022. That was far below lowered views of around 377,000, or even whisper numbers of below 350,000.
Tesla's weakness was concentrated in the U.S. and Europe, where CEO Elon Musk's involvement with the so-called Department of Government Efficiency and his highly public and partisan political activity have had a major brand impact among the EV maker's core customers.
However, Musk reportedly could leave DOGE within a few weeks, according to a Politico report.
Tesla stock sold off at Wednesday's open, but rebounded strongly on the Musk-DOGE report, closing up 5.3% to 282.71. TSLA stock has rallied from the March 11 low of 217.02 but is still below its 200-day moving average, where it hit resistance last week.
But TSLA stock fell solidly overnight.
What To Do Now
The stock market rally attempt had a volatile session, but gained more ground heading into Trump's tariff announcement.
The big overnight sell-off in futures shows why adding exposure was risky heading into the Trump tariff news.
It's still a time to be almost entirely in cash. If the market stages a FTD, investors should add exposure, but do so gradually.
It's crucial to build up watchlists. Look for stocks across various sectors and themes that have shown relative strength, holding above key levels and recent lows.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
