S&P 500 set for muted open as trade optimism wanes; earnings in focus

NEW YORK: Stock index futures pointed to a flat open for the benchmark S&P 500 on Thursday, with a short-lived Wall Street rally fizzling out as hopes for more progress on US-China trade negotiations faded and investors assessed a bevy of mixed corporate results.

Wall Street had jumped for a second consecutive session on Wednesday on signs the White House was open to reducing sweeping tariffs on China, and after President Donald Trump stepped back from his attacks on Federal Reserve Chairman Jerome Powell.

That optimism faded when Treasury Secretary Scott Bessent said a move to reduce levies would not come unilaterally, while China said in response that the US should lift all unilateral tariff measures.

There has been no negotiations between the two countries.

Latest US economic data, however, helped with market sentiment.

It showed an only moderate rise in weekly jobless claims and a much larger than expected jump – up 9.2 per cent versus the 2 per cent forecast – in March orders for durable goods.

A deluge of changing headlines and the lack of clarity in the market are making it difficult for investors, companies and consumers to assess the impact of Trump’s changing stance on trade policy.

“The tariffs that the Trump administration is rolling out are still having a powerful effect on sentiment and the administration is vacillating between backing away from the full implementation and going forward,” said Matt Gertken, chief strategist at BCA Research.

“The administration backtracking tells the markets that the strategy is to implement tariffs, but not to cause a recession, as long as that’s the case, then the trade war will be a sort of a two steps forward, one step back process.”

A bag of mixed results has not helped much with clearing the economic uncertainty induced by tariffs. American Airlines and Southwest Airlines joined peers in withdrawing financial forecasts, sending their shares down 0.8 per cent and 3 per cent, respectively, in premarket trading.

PepsiCo shares fell 0.4 per cent and Proctor & Gamble lost 1 per cent after both companies cut annual profit forecasts, citing the impact of the trade war.

At 08:48 am ET, Dow E-minis 1YMcv1 were down 150 points, or 0.38 per cent, S&P 500 E-minis EScv1 were down 2.5 points, or 0.05 per cent and Nasdaq 100 E-minis NQcv1 were up 24.5 points, or 0.13 per cent.

Stocks have dropped as escalating trade tensions have increased worries about a severe economic slowdown, while Trump’s attacks on Powell have brought the central bank’s independence into question.

All three major indexes are in the red year-to-date and the S&P 500 is down over 12 per cent from its February record high.

Shares of International Business Machines slumped 6.6 per cent after the company said 15 of its government contracts were shelved under a cost-cutting drive by the Trump administration.

Software firm ServiceNow, on the other hand, leapt 9 per cent after beating first-quarter profit estimates.

Alphabet is set to report after the closing bell.

China’s manufacturing backbone feels Trump trade war pinch

Minneapolis Fed President Neel Kashkari is also scheduled to speak later in the day.