U.S. equity futures moved modestly higher on Tuesday as traders attempted to stabilize portfolios after a widespread drop across the main indexes the previous session. The market downturn on Monday followed fresh uncertainty over a tariff decision by President Donald Trump and heightened investor anxiety about potential economic impacts from advances in artificial intelligence.
All three major indexes fell by more than 1% on Monday, with financials and software names among the weakest performers. The selling accelerated after the U.S. Supreme Court issued a ruling that prompted President Trump to announce a temporary global tariff of 10%. That levy took effect on Tuesday. The president later indicated the tariff would be 15%, though it was not clear when, or if, that higher rate would be implemented.
Analysts and market participants highlighted the uncertainty around the tariffs as a driver of market volatility. "While the direct impact of tariffs may prove temporary from a monetary perspective, the lack of clarity regarding their duration and scope keeps volatility elevated," said Antonio Di Giacomo, senior market analyst at brokerage XS.com.
Monday’s losses were also attributed in part to a bearish note from Citrini Research that outlined possible threats to the global economy arising from the rise of artificial intelligence, a theme that has shaken sentiment toward high-valuation tech and software companies.
At 06:04 a.m. ET, futures were modestly higher: Dow E-minis rose 133 points, or 0.27%, S&P 500 E-minis added 17.5 points, or 0.25%, and Nasdaq 100 E-minis gained 88.75 points, or 0.36%.
In premarket trading, many large-cap and growth names recovered some ground after Monday’s declines. Microsoft and Meta Platforms both posted slight rebounds following steep losses the prior day. Home Depot jumped 2.7% after the home-improvement retailer reported fourth-quarter sales that beat estimates. Keysight Technologies surged 16.2% after forecasting second-quarter profit above Wall Street expectations, while Hims & Hers Health fell 6.8% after forecasting first-quarter revenue below analysts’ projections.
Investors were also focused on one of the week’s marquee earnings events: Nvidia, the chipmaker central to AI investment, is scheduled to report results after markets close on Wednesday. Nvidia shares were last higher by 0.5% in premarket trade. Major software companies including Salesforce and Intuit are due to report later in the week, drawing extra scrutiny given the recent pullback in software stocks.
The S&P 500 software and services index, which has declined roughly 24% year-to-date, fell another 4.3% on Monday, making it one of the worst-performing sectors in the selloff.
February has been a challenging month for U.S. equities as lofty valuations and worries about AI-driven disruption have pressured technology and related sectors, prompting questions about whether heavy AI spending is delivering returns.
Political and policy events add to a crowded calendar. President Trump is set to deliver the State of the Union address to Congress later on Tuesday. At least six Federal Reserve officials were scheduled to speak through the day, as investors seek guidance on the outlook for monetary policy. Traders currently expect the Fed to leave its policy rate unchanged at the March meeting, with the next rate cut penciled in for June, according to the CME FedWatch Tool.
Key Points
- Tariff uncertainty - President Trump announced a temporary 10% global tariff that took effect Tuesday and later indicated a possible 15% rate without specifying timing; this has elevated market volatility and pressured high-risk equities, particularly financials.
- AI concerns weigh on software - A bearish report from Citrini Research and investor unease about AI disruption have hit software and growth stocks, contributing to sharp sector declines.
- Earnings and policy events in focus - Nvidia’s quarterly report and results from major software firms, along with the State of the Union and remarks from multiple Fed officials, create near-term catalysts for market moves.
Risks and Uncertainties
- Tariff scope and duration - Ambiguity over whether the announced tariff will remain at 10% or move to 15%, and when any change would occur, poses uncertain costs for companies and could keep volatility high, affecting financials and export-sensitive sectors.
- AI-driven economic concerns - The report highlighting potential global economic threats from AI has already weighed on software companies, raising the risk of further downside in high-valuation technology and services firms if investor sentiment deteriorates.
- Corporate earnings and policy signals - Upcoming earnings from major AI-related and software companies, plus speeches from multiple Fed officials and the State of the Union, could produce additional market swings depending on results and commentary.