US stock futures are pointing to a lower open on Tuesday, with traders in wait-and-see mode ahead of the Federal Reserve’s two-day policy meeting and the latest developments in global trade negotiations. After the S&P 500 snapped its nine-day winning streak—its longest in over two decades—on Monday, caution has set in across global markets as investors weigh economic signals against mounting geopolitical risks.
Futures tied to the Dow Jones Industrial Average have dropped as much as 0.7%, or around 300 points, while the S&P 500 and Nasdaq futures are down 0.9% and 1.1% respectively. This negative tone follows Monday’s selloff when major indexes lost ground as uncertainty over US tariffs and their impact on global trade dynamics pressured sentiment. While some upbeat data from the ISM indicated strength in the US service sector, concerns about the path of US trade policy and new tariffs quickly overshadowed the good news, especially after President Trump stated he does not plan to speak with Chinese President Xi Jinping in the near term, despite ongoing trade discussions.
Traders are now laser-focused on the outcome of the Federal Reserve’s policy meeting, which starts today and concludes Wednesday. Fed Chair Jerome Powell is widely expected to leave interest rates unchanged, but his comments on the economic outlook and the potential effects of recent tariffs are critical. While “soft” economic indicators have deteriorated, “hard” data like employment and services activity remains resilient, leading most market participants to anticipate that the central bank will hold off on any rate changes for now. However, the bond market is pricing in expectations for a potential rate cut in July if trade tensions worsen or if economic data weakens further.
With President Trump’s recent tariff announcements already creating significant crosscurrents in the market, strategists warn that even milder tariffs could slow economic growth and put upward pressure on inflation. The uncertainty surrounding trade has left both equity and bond markets on edge, as investors await greater clarity about the Fed’s next moves and any signs of progress—or escalation—in trade negotiations with key partners like China.
For stock traders and financial market investors, today’s setup underscores the importance of staying alert to policy headlines and macroeconomic data releases. Volatility could spike in response to surprises from the Fed or unexpected developments on the trade front. Sectors with extensive exposure to international supply chains, including tech and industrials, may see heightened movement, while rate-sensitive stocks could react to any signals about the Fed’s future path. As US dollar, gold, and oil prices also fluctuate in response to these macro drivers, active trading strategies and careful risk management are more crucial than ever in this environment.
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