Dow futures slide as trade fears overshadow Federal Reserve moves
Dow and broader stock futures dropped early Friday following reports that China is planning to retaliate with a new round of import tariffs on US goods.
The trade news was overshadowing the annual Federal Reserve symposium in Jackson Hole, at which Fed Chairman Jerome Powell will give a highly anticipated speech at 10 a.m. ET.
Stock futures, which were initially up, dropped on the reports of Chinese tariffs, with futures for the Dow down 0.3%, and those for the S&P 500 and the Nasdaq Composite, down 0.3% and 0.4%, respectively.
The Chinese tariffs will impact $75 billion worth of US goods and range from 5% to 10%, according to multiple news reports. China will also resume its 25% tariffs on US car imports. The move was the latest escalation in the ongoing US-China trade war.
Prior to the tariff news, St. Louis Fed President James Bullard talked monetary policy as the day in Jackson Hole is getting under way. Bullard spoke out in favor of interest rate cuts on CNBC given the recent inversion of the Treasury yield curve.
The inversion, meaning shorter-dated bonds yield more than longer-dated bonds, has been a historic recession indicator.
Investors are eying Powell’s speech for details regarding the Fed’s future policy path. Expectations for a quarter percentage point rate cut in September are at nearly 100%.
In the minutes from last month’s central bank meeting, released Wednesday, the July rate cut was described a mid-cycle adjustment rather than the beginning of an easing cycle.
