U.S. equity futures tumbled in early Monday trading, while the dollar extended its weeks-long slump and Treasury bonds rallied, as investors extended their retreat from risky markets amid broadening concerns that President Donald Trump’s tariff and government jobs cuts could tip the world’s biggest economy into recession.
Stocks ended firmly higher on Friday, following another whipsaw session that saw the market’s benchmark volatility gauge rise to the highest levels since December. A late-session rally tied to positive comments from Federal Reserve Chairman Jerome Powell ultimately lifted stocks into the green, but the S&P 500 still ended the week with its biggest loss since September.
Investors aren’t motivated to boost stocks much further this week, however, following weekend comments from President Trump where he failed to rule out the chance of recession and defended his on-again, off-again tariff rollout as necessary in his effort to rebalance the economy.
“I hate to predict things like that,” Trump told Fox News’ Maria Bartiromo when asked if the economy faced recession risks.
“There is a period of transition, because what we’re doing is very big. We’re bringing wealth back to America,” he added. “That’s a big thing, and there are always periods of, it takes a little time. It takes a little time, but I think it should be great for us.”
New levies on steel and aluminum imports could be imposed this week, and Trump hinted Friday that some ‘reciprocal’ tariffs could be applied to goods from Canada and Mexico before the 30-day relief period he established last week.
Beyond tariffs, markets are likely to focus on a key set of inflation readings this week, with CPI data for the month of February due on Wednesday and producer price figures slated for the following day.
A hotter-than-expected reading, paired with Friday’s weaker-than-expected jobs report, could stock concerns over stagflation risks if investors feel inflation is reaccelerating while the economy is slowing.
Related: Fed chair Powell echoes worries in interest rate forecasts
Only a handful of S&P 500 earnings reports are expected this week as the fourth quarter reporting season draws to a close, with updates from Oracle (ORCL) and Adobe (ADBE) likely to capture the market’s attention.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500, which is down 3.1% for the month, are priced for an opening bell decline of around 55 points.
The tech-focused Nasdaq, which slumped into correction territory on Friday from its late-December peak, is called 215 points lower while the Dow is priced for a 335 point pullback.
Benchmark 10-year Treasury note yields were last marked at 4.257% heading into the start of the New York trading session, a 5 basis point decline from Friday levels, with 2-year notes trading 5 basis points lower at 2.946%.
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In overseas markets, Europe’s Stoxx 600 was marked 0.48% lower in mid-day Frankfurt trading, reversing a modest early gain, while Britain’s FTSE 100 slipped 0.28% in London.
Overnight in Asia, the biggest slide for CPI inflation in China in more than a year reignited deflation risks in the world’s second-largest economy, pulling the regional MSCI ex-Japan benchmark 1.02% lower into the close of trading.
Japan’s Nikkei 225, which hit a six-month low last week, edged 038% higher with tech stocks pacing the modest advance.
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