Dow Jones futures fell sharply early Wednesday along with S&P 500 futures and Nasdaq futures. Huge new Trump tariffs on many key trading partners took effect at midnight, while China increased its retaliatory duties.
The stock market sold off Tuesday after the S&P 500 and Nasdaq composite had rallied more than 4% intraday.
Some discounters are holding up, including Ollie's Bargain Outlet and TJX Cos., along with a handful of other defensive growth plays. A few growth leaders are showing some relative strength, including Spotify, Netflix, AppLovin and Palantir Technologies. But those names are still below their 50-day lines, and they erased or reversed gains Tuesday.
Apple, which faces massive iPhone tariffs, tumbled to fresh 11-month lows Tuesday. Tesla is around 2025 lows as CEO Elon Musk feuds with Trump trade advisor Peter Navarro.
Investors should be extremely defensive in the current environment.
Delta Air Lines beat lowered first-quarter earnings targets early Wednesday, but sales missed. Kicking off industry results, Delta pulled 2025 EPS guidance, saying Trump trade policies are hurting bookings. Delta stock was little changed before the open.
Walmart pulled first-quarter operating profit guidance, citing tariff uncertainty. Shares of the Dow giant fell slightly.
The video embedded in the article reviews Tuesday's whipsaw market action and analyzes Primo Brands, TJX and Netflix stock.
Dow Jones Futures Today
Dow Jones futures tumbled 2% vs. fair value. The S&P 500 futures slumped 2%. Nasdaq 100 futures gave up 1.7%. Futures, which are volatile, had improved to mixed until China hiked retaliatory tariffs on the U.S. even further just before 7 a.m. ET.
The 10-year Treasury yield continued its surprising and unsettling rebound, jumping to 4.46% after briefly topping 4.5% overnight. The 30-year Treasury yield briefly cleared 5%.
Markets are now leaning toward a Fed rate cut at the May 7 meeting, with some speculation of an emergency cut before then.
Crude oil futures dived nearly 6%, extending a major sell-off.
Gold jumped as the dollar tumbled.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Sweeping Trump Tariffs Take Effect
Huge new tariffs took effect at midnight Wednesday. President Donald Trump announced the so-called reciprocal tariffs on April 2, which are actually based off trading partners' bilateral surpluses with the U.S. The U.S. is charging a 20% tariff on imports from the European Union, 24% on Japanese goods and 46% on products from Vietnam.
Trump imposed a 34% "reciprocal" tariff on imports of Chinese goods, on top of an existing 20% enacted earlier this year. He added a further 50% tariff after Beijing announced a 34% retaliatory tariff on U.S. goods. That will mean a 104% tariff on nearly all Chinese goods.
Early Wednesday, China retaliated by hiking its tariffs on U.S. goods even further, to 84%. It also added more U.S. firms to its unreliable list.
U.S.-China trade may quickly grind to a near-halt.
Apple will try to shift more iPhone production to India and elsewhere, but that's a multiyear process. And Trump is imposing big tariffs on goods from those countries as well. White House press secretary Karoline Leavitt said Tuesday that Trump believes iPhones can be built in the U.S.
A baseline 10% tariff, also announced April 2, began Saturday. That covers everyone from the U.K., which actually has a trade deficit with the U.S., to islands inhabited by penguins.
Concerns are mounting that Trump tariffs will drive the U.S. into recession, especially if the April 9 duties and subsequent sector tariffs come into force. The cumulative Trump tariffs work out to nearly $1 trillion in tax hikes on U.S. importers. At 3% of GDP, that's the biggest U.S. tax hike since 1942.
While President Trump has said many countries want to negotiate, announcing late Tuesday that South Korea and Japan are flying to Washington for talks. It's not clear what deals would be acceptable to both sides.
Wednesday night, Trump reiterated plans to impose big pharmaceutical tariffs soon.
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Stock Market
The stock market rallied strongly Tuesday morning on hopes of Trump trade negotiations, but then staged an ugly reversal.
The Dow Jones Industrial Average closed down 0.8% in Tuesday's stock market trading. The S&P 500 index lost 1.6%. The Nasdaq composite, up as much as 4.6% Tuesday morning, finished down 2.15%. The small-cap Russell 2000 led the decline with a 2.7% drop.
The major indexes did not undercut Monday's intraday lows, so Tuesday marked day two of a stock market rally attempt.
TJX, Ollie's, Sprouts Farmers Market and Primo Brands are fighting for the 50-day lines, but all failed to close above that level Tuesday.
Palantir, Spotify, Netflix and AppLovin stock are in better shape than the vast majority of growth plays, but they don't look good either.
U.S. crude oil prices fell 1.85% to $59.58 a barrel, a four-year low, and down 16.9% over the last four sessions.
The 10-year Treasury yield jumped nearly 10 basis points to 4.26%, up 27 basis points in two days. That's a potentially worrisome trend.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF sank 1.6%. The iShares Expanded Tech-Software Sector ETF slumped 1.35%. Palantir is a major IGV holding, with AppLovin stock also in the ETF. The VanEck Vectors Semiconductor ETF gave up 2.7%.
ARK Innovation ETF tumbled 4.2%. Tesla stock is the No. 1 holding in ARK Invest's ETFs. Cathie Wood's ARK also owns a big stake in Palantir stock.
SPDR S&P Metals & Mining ETF gave up 1.5%. U.S. Global Jets ETF descended 3.6%, with Delta stock a big holding. The Energy Select SPDR ETF retreated 2.3% and the Health Care Select Sector SPDR Fund lost 1.1%.
The Industrial Select Sector SPDR Fund shed 0.8%. The Financial Select SPDR ETF dipped 0.4%.
Time The Market With IBD's ETF Market Strategy
Apple Stock, Tesla
Apple stock sank 5%, hitting the lowest point since early May. Due to its massive sell-off, Apple has lost the title of world's most valuable company to fellow Dow giant Microsoft, which hit a 52-week low.
Tesla stock gave up 4.9%, near Monday's 2025 low. Elon Musk called trade advisor Navarro "dumber than a sack of bricks," continuing a war of words. The Tesla CEO, perhaps fearing further brand damage or retaliation, has been distancing himself from Trump tariffs.
What To Do Now
At any moment, a Trump tariff news headline — even fake headlines — could trigger S&P 500 moves of 5% to 10% in a few minutes. That's just not a stock market environment to be playing.
As the past two days showed, investors should not get excited by intraday moves. Even a good day or two really doesn't mean much, especially in a high-volatility bear market.
Work on watchlists, focusing on stocks with relative strength. But very few stocks are in bases and in uptrends. And even those names could break if the market falls further. Ultimately, many of the next uptrend's leaders may be new names. What those names might be is especially unclear right now, with investors having little clarity on what the global economy is going to look like in just a few months.
Preserving capital is still the primary focus. Active traders need patience, especially in times like these.
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