Dow Jones futures sold off early Friday, along with S&P 500 and Nasdaq futures, as China announced major retaliation vs. Trump tariffs. The March employment report and Federal Reserve Chairman Jerome Powell are on tap.
The stock market plunged Thursday following President Donald Trump's trade tariff tsunami late Wednesday. The major indexes all broke below recent lows, suffering their worst one-day losses since 2020. Small caps entered a bear market.
Apple, Amazon.com, Nvidia and Meta Platforms were big losers, tumbling below recent lows. Tesla also slumped, but it was an inside day.
T-Mobile US, TJX Cos., Southern, Zai Lab, ADMA Biologics, Quest Diagnostics, Take-Two Interactive, Primo Brands, Embraer, Alibaba, and Travelers are among stocks worth watching.
A few are in buy zones, but overall market conditions are highly negative.
What Trump Tariffs Mean For The U.S. Economy And S&P 500
Dow Jones Futures Today
Dow Jones futures sold off 3.2% vs. fair value. S&P 500 futures sank 3.2% and Nasdaq 100 futures tumbled 3.3% as China retaliated vs. Trump tariffs. Futures are off their very worst levels.
Futures suggest the Dow Jones and Nasdaq composite could enter bear market territory, falling 20% from their all-time highs, joining the Russell 2000.
The 10-year Treasury yield dived to 3.9% while crude oil futures plunged 8% as U.S. and global recession fears mount.
The CBOE Volatility Index, or VIX shot up to its highest level since the early August spike on the yen carry reversal. That could indicate a short-term bottom is near, though any bounce wouldn't have to last. And is that enough fear given the significant risk of recession and global disruption?
The March jobs report at 8:30 a.m. ET is sure to move Dow futures and Treasury yields.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
China Retaliates Vs. Trump Tariffs
Early Friday, China hiked tariffs on U.S. goods by 34%, according to state media. That's in response to President Trump's 34% tariff hike on Chinese goods announced Wednesday, bringing his total hikes on China products this year to 54%.
China also imposed export controls on some rare earth items.
After Trump hiked tariffs on China earlier this year, Beijing responded with modest tariffs on some U.S. goods.
The European Union and many other trading partners are mulling retaliation as well.
Trump said Thursday that he's open to negotiations with other countries, but given other countries' generally low tariffs and his focus on trade surpluses it's unclear what concessions they could offer.
Jobs Report, Powell Speech
Economists expect the March jobs report to show a nonfarm payroll rise of 131,000, with the jobless rate ticking up to 4.2%. This jobs report isn't expected to pick up many Trump tariff effects or DOGE-related job cuts.
Fed chief Jerome Powell will speak at 11:25 a.m. ET. He could discuss the economy and monetary policy outlook, but may not provide new insights. The Trump tariffs are still in flux, with "hard" economic data not showing significant effects. Fed Gov. Christopher Waller will speak at 12:45 p.m. ET.
Join IBD experts as they analyze leading stocks and the market on IBD Live
Stock Market Rally
The stock market rally suffered huge, broad losses on Thursday, with all the major indexes hitting new lows, ending rally attempts. The Trump tariffs announced late Wednesday were much higher than markets expected.
Speaking to reporters Thursday, Trump said his new tariff plan is "going very well." He predicted, "The markets are going to boom. The stock is going to boom. The country is going to boom."
The Dow Jones Industrial Average shed 4% in Thursday's stock market trading, marking its worst levels since September. The S&P 500 index tumbled 4.8%, to the lowest level since early September. The Nasdaq composite plunged 6%, to the lowest point since early August.
The small-cap Russell 2000 sold off 6.6% to a 52-week low and entered bear market territory.
Overall, the number of stocks hitting 52-week lows was the highest since October 2022.
The Dow Jones and S&P 500 had their biggest one-day percentage losses since June 2020, while it was the Nasdaq's worst day since March 2020.
U.S. crude oil prices plunged 6.6% to $66.95 a barrel on demand fears and OPEC+ speeding up production increases. It was the biggest percentage decline since July 2022.
The 10-year Treasury yield dived 14 basis points to 4.05%, hitting the lowest levels since mid-October.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF sank 3%. The iShares Expanded Tech-Software Sector ETF dropped 5.3%. The VanEck Vectors Semiconductor ETF sold off 8.65%. Nvidia stock is the top holding in SMH.
ARK Innovation ETF skidded 8.3% and ARK Genomics ETF retreated 5.7%, with Tesla stock the No. 1 position across ARK Invest's ETFs.
SPDR S&P Metals & Mining ETF gave up 7.5%. U.S. Global Jets ETF descended 8.7%. SPDR S&P Homebuilders ETF stepped down 7.1%. The Energy Select SPDR ETF slumped 7.85% and the Health Care Select Sector SPDR Fund declined just 0.8%.
The Industrial Select Sector SPDR Fund lost 5.4%. The Financial Select SPDR ETF shed 4.9%. The SPDR S&P Regional Banking ETF plummeted 10.3%.
How To Invest: When To Buy And Sell Stocks In Bull And Bear Markets
What To Do Now
The stock market correction is starting a new leg down. It's possible that the indexes will get a bounce soon, but one or even two good days doesn't mean much in a downturn.
It's a time to be extremely defensive, with minimal exposure or even 100% cash.
Defensive stocks have been doing well, but if the market rebounds, even briefly, these names could fall back. Defensive growth is a mixed bag.
Work on watchlists. With the market heading down, focus on stocks with strong relative strength. A few will be setting up, but that's not really the focus at the moment. You want to be ready for the next market uptrend. That could come soon or be months away.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
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