U.S. Stock Futures Rebound after Trade Related Selloff
Investing.com - U.S. stock futures pointed to a higher open on Tuesday a day after a steep selloff triggered by an escalation in trade tensions between the U.S. and China.
The blue-chip Dow futures gained 158 points, or 0.6% by 6:52 AM ET (10:52 GMT), S&P 500 futures rose 21 points, or 0.7%, while the tech-heavy Nasdaq 100 futures climbed 75 points, or 1.0%.
The gains came after a broad based selloff on Wall Street on Monday that saw the Nasdaq post its largest percentage drop this year and the worst performance in the Dow and S&P 500 since Jan. 3.
Investor sentiment was soothed somewhat after U.S. President Donald Trump said he plans to meet with his Chinese counterpart Xi Jinping at the meeting of G20 leaders next month. "That'll be, I think, probably a very fruitful meeting,” he said.
Trump also predicted that the outcome of trade talks would come “in about three or four weeks.”
However, the escalation has substantially changed the outlook for the stock market, some analysts say.
"If Trump is serious and slaps 25% tariffs on all imports from China, profits (at S&P 500 companies) could fall by by between 20% and 30%," warned Deutsche Bank (DE:DBKGn) strategist Ulrich Stephan.
The Chinese government also said on Tuesday that both sides would continue to talk, fueling hopes that the recent escalation in tensions could be reversed.
Beijing announced Monday that it would place tariffs on about $60 billion in U.S. imports in retaliation for American tariff increases on its products.
Investors were looking ahead to appearances by Federal Reserve officials Esther George and Mary Daly later in the day, hoping for clues on whether the Fed would act to pre-empt any economic slowdown caused by the escalation of the trade dispute.
Earlier Tuesday, New York Fed President John Williams (NYSE:WMB) said slow recoveries from recessions and low inflation are here to stay unless policymakers can get a better grip on how to stabilize the global economy in an era of lower interest rates.
In earnings news, Ralph Lauren (NYSE:RL) was to report ahead of the open while cannabis companies Tilray (NASDAQ:TLRY) and Aurora (NYSE:ACB) were to release their earnings figures after the close.
Outside of equities, the U.S. dollar index, which measures the greenback against six rival currencies, was little changed at 97.170 by 6:52 AM ET (10:52 GMT), while the yield on the 10-year Treasury was last trading at 2.40%.
In commodities, gold futures were down $3.45, or 0.3%, at $1,298.5 a troy ounce, while crude oil traded up 45 cents, or 0.7%, to $61.50 a barrel.
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