US stock futures fell sharply on Monday as investors fled to safe havens after President Donald Trump's sweeping tariffs on Canada, Mexico and China stoked fears of a global trade war, weaker corporate earnings, and an economic slowdown. Futures linked to the S&P 500, Dow Jones, and Nasdaq 100 fell 1.3-1.8 percent in early trade, signaling a rocky session ahead for Wall Street.
At 4:11 a.m. ET, Dow Jones futures were down 588 points, or 1.32 percent, while S&P 500 futures slid 1.55 percent. Nasdaq 100 futures took a steeper hit, falling 1.86 percent as major tech stocks like Nvidia, Apple, and Microsoft slumped by around 2-3 percent.
The decline came after Trump imposed 25 percent tariffs on Canadian and Mexican imports and 10 percent duties on Chinese goods over the weekend. The move triggered immediate retaliatory threats from Canada and Mexico, while China said it would challenge the tariffs at the World Trade Organization.
Wall Street braces for earnings hit
Goldman Sachs and Morgan Stanley analysts warned that prolonged tariffs could drag down corporate earnings, with S&P 500 companies potentially seeing a 2-3 percent decline in earnings per share (EPS) if the tariffs persist.
RBC Capital Markets projected a potential 5-10 percent correction in US stocks due to weaker earnings and investor uncertainty. Analysts remain cautious about the outlook for US equities. “We doubt that many companies will be able to avoid the impact of tariffs,” said Kathleen Brooks, research director at XTB Ltd.
Trump downplayed expectations of a policy reversal but confirmed he would hold talks with Canadian and Mexican leaders later on Monday. Meanwhile, he warned that tariffs on European goods “will definitely happen”, adding further uncertainty to global markets.
The tech sector bore the brunt of the selloff, with semiconductor stocks like Nvidia and Broadcom sliding over 3 percent. Automakers also suffered heavy losses, with General Motors plunging 6.7 percent and Ford dropping 4.1 percent as investors worried about higher input costs.
Investors flee to safe havens
Treasury yields eased slightly as investors moved into safer assets like bonds, while the US dollar surged to a near two-year high. The Bloomberg Dollar Index rose 0.9 percent, driven by expectations that tariffs would fuel higher inflation, prompting the Federal Reserve to keep interest rates elevated. Goldman Sachs estimated that the new trade measures could shave 1.2 percent off US economic growth while adding 0.7 percent to core inflation, further pressuring consumers.
Beyond Wall Street, the fallout spread to global markets. The Stoxx Europe 600 index fell 1.5 percent, dragged down by steep losses in automakers like Volkswagen and Stellantis. In emerging markets, the Mexican peso slumped more than 2 percent, while the South African rand weakened after Trump announced plans to halt US funding to the country.
Meanwhile, oil prices surged, with West Texas Intermediate (WTI) crude jumping 2.4 percent, amid fears that tariffs on North American energy imports could disrupt supply chains and push up gasoline prices.
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