US stock futures rose on Friday as investors anticipated a market rebound following a significant decline amid ongoing trade tensions and easing government shutdown fears.
S&P 500 experiences sharp decline
The S&P 500 has seen a rapid 10% decline from its record high on February 19, transitioning into correction territory, resulting in a loss of around $5.28 trillion in market value in approximately three weeks. The index’s market cap decreased from $52.06 trillion to $46.78 trillion, according to FactSet.
This decline coincides with President Donald Trump’s escalating trade war with major trading partners, where tariff announcements have significantly influenced market movements. Signs of slowing economic growth, reflected in weak consumer sentiment surveys and cautious forecasts from retailers like Walmart, have also contributed to investor anxiety.
“Our interactions with clients indicate that the mood music is changing. While many see recession talk as premature, concerns about erratic policy from the new administration abound, with the ‘uncertainty tax’ hitting growth expectations,” stated Barclays strategist Emmanuel Cau.
Furthermore, a downsizing of the growth trade connected to artificial intelligence has played a role in the S&P 500 decline. Notably, Nvidia has fallen 17% since November 19, and the Roundhill Magnificent Seven ETF (MAGS) has decreased by 19%. The S&P 500 currently trades at 24.1 times its trailing 12-month earnings, significantly above its historical average.
S&P 500 dips 0.8% below key level and Dow slides on trade uncertainty
Market futures show signs of recovery
S&P 500 futures rose approximately 0.9% after the index closed in correction territory on Thursday. The tech-heavy Nasdaq 100 futures jumped 1.1%, while the Dow Jones Industrial Average futures increased by around 0.6%.
Despite the rough week, a positive development emerged as Senate Democratic leader Chuck Schumer withdrew a threat to block a funding bill intended to prevent an impending government shutdown. In parallel, gold prices surged above $3,000 an ounce for the first time, driven by concerns regarding the economic fallout from Trump’s tariff impositions. Trump asserted he does not intend to “bend at all” in the ongoing tariff disputes.
Investor sentiment appeared to shift, as indications showed a reduction in signs of economic strain, following data revealing inflation rates aligning with Federal Reserve expectations. However, this data could still give policymakers reasons to exercise caution.
In further financial trends, Bank of America reported the largest weekly outflow from stock funds this year, totaling $2.8 billion, signaling a deterioration in market sentiment. U.S. government bond funds saw an inflow of $6.4 billion, the largest since August, reflecting a “risk-off” approach by investors.
While stock funds faced outflows, there was an influx of $5 billion into European equities, suggesting a reallocation of investment strategies. Meanwhile, Chinese stocks saw a surge, with the CSI 300 index reaching its highest level since mid-December on growing optimism for governmental policy support aimed at boosting consumer spending.
The recent market volatility surrounding tariffs and economic conditions has influenced global investor behavior, pushing some towards Chinese equities which remain significantly undervalued compared to their 2021 highs.
Disclaimer: The content of this article is for informational purposes only and should not be construed as investment advice. We do not endorse any specific investment strategies or make recommendations regarding the purchase or sale of any securities.
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