S&P Futures declined on Tuesday, continuing the downward trend observed late last week, amid ongoing concerns regarding U.S.-China trade relations. Futures for the Dow Jones Industrial Average declined by 276 points, representing a decrease of 0.6%. S&P 500 futures decreased by 0.9%, while Nasdaq-100 futures fell by 1.7%. The decline was primarily driven by the AI shares that have propelled the bull market, yet they also emerged as the most significant losers during Friday’s sell-off. Nvidia and AMD experienced declines exceeding 2%. Tesla and Oracle experienced a decline of approximately 3%.

The declines were observed following the implementation of additional port fees by China and the U.S. on each other’s cargo ships, marking an escalation in the ongoing trade dispute between the two largest economies globally. Additionally, China has enacted sanctions against five U.S. subsidiaries of South Korea’s Hanwha Ocean. Trade tensions have escalated since late last week, following President Donald Trump’s threat to impose an additional 100% tariff on Chinese imports, which resulted in a significant decline in stock prices. On Friday, the Dow experienced a decline exceeding 800 points, whereas the S&P 500 recorded its most significant single-day drop since April 10. On Sunday, Trump moderated his tone, stating in a post: “Don’t worry about China, it will all be fine.”

That comment resulted in a significant increase in stock prices on Monday. The S&P 500 and Dow experienced an increase exceeding 1% during the day, signifying the former’s most substantial one-day rise since May 27. The Dow experienced its most significant gain since September 11, effectively ending a five-day period of declines. Monday’s rebound recouped over fifty percent of the S&P 500’s drop on Friday, and approximately two-thirds of the Dow’s significant losses.

“Trade policy remains a key driver for US financial markets this year, and last week saw a sharp re-escalation in tensions between the US and China,” stated Ulrike Hoffmann-Burchardi. “Given the entrenched stances of both parties, we anticipate heightened volatility in the equity markets as we approach the month’s conclusion.” Nevertheless, the historical context of negotiations between Trump and Xi indicates that periods of escalation are frequently succeeded by strategic pauses, and the interplay between rare earth minerals and shipping costs may ultimately facilitate an agreement. Tuesday’s movements occurred in the context of predominantly strong quarterly results being released. Johnson & Johnson, JPMorgan Chase, and Wells Fargo all disclosed earnings that surpassed analyst forecasts. Goldman Sachs exceeded expectations.