U.S. stock futures dropped on Tuesday as investors waited for the Federal Reserve’s policy decision and watched global trade talks. Dow futures fell 0.7%, or 303 points. The S&P 500 dropped 0.9%, and the Nasdaq slid 1.2%.
The Fed is expected to keep interest rates the same on Wednesday, with only a 2.7% chance of a rate cut. However, everyone will be watching Fed Chair Jerome Powell’s economic outlook during his comments. Trade tensions continue to affect markets.
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President Trump met with Canadian Prime Minister Mark Carney on Tuesday. This marks the start of talks between the two nations since Carney took office earlier this year. Treasury Secretary Scott Bessent said on Monday that trade agreements could be finalized soon.
This echoes Trump’s comments from Sunday. Reports said India has proposed zero tariffs on certain goods, but no official trade deals have been announced yet. Data from the Institute for Supply Management showed stronger-than-expected service sector activity in April.
But worries about tariffs remain. Paul Tudor Jones, a billionaire hedge fund manager, said the stock market might hit new lows even if Trump reduces China tariffs. “For me, it’s clear.
Trump is locked in on tariffs, and the Fed is locked in on not cutting rates. That’s not good for the stock market,” Jones said.
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He believes the market could drop significantly even if tariffs on China are reduced. The S&P 500’s lowest close this year was 4,982.77 on April 8. The U.S. trade deficit hit a record high in March as imports rose.
Businesses and consumers tried to stay ahead of upcoming tariffs. The Commerce Department reported a shortfall of $140.5 billion, up 14% from the previous month. Imports increased by 4.4% to $419 billion, with a notable rise in consumer goods.
The deficit has increased by 92.6% year over year. Several stocks were active in premarket trading on Tuesday. Palantir shares dropped more than 8% after a lower-than-expected earnings beat.
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Investors await key Fed decision
Ford fell over 2% after warning of potential supply chain disruptions. Neurocrine Biosciences shares jumped nearly 10% after reporting substantial first-quarter revenue. TD Cowen downgraded Church & Dwight to a hold, citing broader economic pressures and a lack of positive catalysts for U.S. growth.
The firm lowered its price target from $117 to $100 per share. Asia-Pacific markets were mixed as investors assessed trade developments. Chinese stocks climbed after the Labor Day holidays on positive signals from trade discussions.
However, Indian and Australian markets slightly declined, while Japanese and South Korean markets were closed for public holidays. U.S. stock futures opened flat on Monday night. S&P 500 futures dipped less than 0.1%, Nasdaq 100 futures fell 0.2%, and Dow Jones Industrial Average futures hovered just above the flatline.
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