U.S. stock futures sink after China ratchets up trade threat

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Dow Jones NewsApr 21, 3:04 AM UTC
MW U.S. stock futures sink after China ratchets up trade threats

By Mike Murphy

U.S. stock futures fell Sunday after another rough week on Wall Street, and as China threatened to retaliate against countries that cooperate with U.S. trade restrictions.

Accusing the U.S. of "unilateral bullying," China's Ministry of Commerce said "China firmly opposes any party reaching a deal at the expense of China's interests. If this happens, China will not accept it and will resolutely take reciprocal countermeasures." The Trump administration is planning to pressure its trade partners to reduce trade with China in exchange for tariff relief, the Wall Street Journal reported last week.

Dow Jones Industrial Average futures (YM00) sank about 380 points, or 1% by around 11 p.m. Eastern on Sunday. S&P 500 futures (ES00) and Nasdaq-100 futures (NQ00) were also down around 1%. The price of West Texas Intermediate crude (CL.1) fell more than 1.8% to $63.55 a barrel, while gold (GC00)rose 2% to $3,395.50. Bitcoin (BTCUSD) rallied to $87,287, while the U.S. Dollar Index DXY fell 1%.

Stocks were mixed on Thursday, but all three major U.S. indexes logged weekly losses for the third time in the past four weeks. The Dow DJIA ended last week off 2.7%, while the S&P 500 SPX dipped 1.5% and the Nasdaq Composite COMP slid 2.6%. The stock market was closed for the Good Friday holiday.

On Thursday, the Dow entered a "death cross" for the first time since November 2023, as its 50-day moving average crossed below its 200-day moving average. While potentially signifying a more serious downward trend, historical data shows that the Dow's performance after a "death cross" has been consistently positive.

Investors are still worried about the potential effects of stiff tariffs against America's trading partners that the Trump administration imposed - then largely paused - earlier this month. Trade negotiations are said to be underway with China - which is facing 145% tariffs - Japan, the European Union and Mexico.

Read more: Investors are eager for tariff deals. They might get more tumult in bonds and stocks instead.

In a note Sunday, Stephen Innes, managing partner at SPI Asset Management, called Trump's tariff plan "a seismic wave that's about to roll through the global economy."

"And make no mistake, there's a cost to all this," he wrote. "Even if deals start rolling in, the reputational hit to the U.S. brand is real. Policy predictability is shot. Trade partners will rethink exposure. Investors will build in a U.S. political volatility premium that didn't exist before. You don't take a sledgehammer to the global trade architecture and expect everyone to forget it six months later."

There are also increasing fears that President Donald Trump may try to fire Fed Chair Jerome Powell, after Trump increased his criticism of Powell last week and called for interest rates to be cut.

Trump's comments came after Powell said Wednesday that Trump's tariffs will likely cause higher inflation and slower economic growth.

More: Trump won't fire Powell - but he could still pressure the Fed, says economist studying president's tweets

Chicago Federal Reserve President Austan Goolsbee said Sunday that U.S. economic activity could take a dive this summer, following "artificially high" spring readings as businesses and consumers stock up on "preemptive purchasing" before the tariffs take effect.

Investors are also looking forward to quarterly earnings this week from Google parent Alphabet Inc. (GOOG) (GOOGL), Tesla Inc. (TSLA) and Boeing Co. (BA).

Also read: Opinion: This Tesla and Alphabet earnings play could profit from stock-market volatility

-Mike Murphy

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

04-20-25 2304ET