US stock index futures were sharply lower in early trade this morning, adding to losses made during Thursday’s session. All the US majors closed in the red yesterday, despite strong second quarter results from Microsoft and Meta Platforms, together with news that both ‘Magnificent Seven’ constituents were ramping up their spending on AI development.
The NASDAQ posted a minimal loss, while the S&P 500 ended down 0.4%. Both indices had hit fresh all-time intra-day highs earlier in the session. Meanwhile, the Dow and Russell 2000 fell 0.7% and 0.9% respectively. The tech-fuelled rally fizzled somewhat on tariff concerns ahead of President Trump’s overnight deadline.
Source: TN Trader
Mr Trump’s latest tariffs will bring increased duties on a wide range of US imports. These measures include 35% tariffs on Canadian goods, 25% on India, 15% on both Japan and the European Union, and nearly 40% on Swiss products. Cambodia and Malaysia face rates of 19%, while Taiwan is now subject to a 20% tariff. These additional levies will officially start in a week’s time. Mexico has been granted a 90-day extension amid ongoing negotiations.
Just hours before the deadline, President Trump confirmed that goods transhipped to avoid existing duties would also face a punitive 40% levy. The sweeping changes to trade policy have overshadowed otherwise strong earnings from Microsoft and Meta Platforms, leaving investors uncertain about the near-term direction for equities.
After last night’s close, Apple delivered solid quarterly results, reporting strong iPhone sales that saw its stock post a 2% gain. However, this positive tone was short-lived. Amazon’s earnings fell flat with investors. There was particular concern over disappointing results from its cloud division, along with some cautious forward guidance. Amazon tumbled over 8% following the news, and it’s also worth noting that key semiconductor manufacturers were all in the red this morning. Nvidia and TSMC were both down over 2%, while Super Micro Computer and Advanced Micro Devices were down over 4% each.
Market volatility ticked up this morning. The VIX has risen close to 12% since the beginning of this week, reflecting growing investor unease as earnings, tariffs and key macro data converge. Despite strong results from Apple, headline risk has reemerged. With updated US tariffs soon to take effect, traders are likely to remain cautious, especially heading into the weekend.
Traders now turn their attention to July’s Non-Farm Payrolls which are released later today. The consensus expectation is for a payroll print of around 110,000 jobs, down from 147,000 previously. Analysts also expect the Unemployment Rate to tick up to 4.2% from 4.1%. This is a key measure of the US labour market, and of great importance as far as the Federal Reserve is concerned.
The Fed has a dual mandate: to maintain price stability (keep inflation under control) while ensuring maximum employment. As things stand, inflation is taking precedence. But any softening in the labour market will make it difficult for the central bank to argue against loosening monetary policy.
Meanwhile, the Federal Reserve’s decision to hold rates at 4.25%–4.5% in a 9-2 vote earlier this week shows internal division, particularly as President Trump continues to push for rate cuts. With the Fed on pause until September at the earliest, attention turns to economic data. So today’s Non-Farm Payroll report will be watched closely.
