US Stock Futures Drop on Signs of Trade War Damage: Markets Wrap

Sujata Rao and Julien Ponthus

Tue, May 6, 2025, 5:38 AM 4 min read

(Bloomberg) -- US stocks were set for a weaker open after a slew of downbeat corporate statements and fears that the global trade war could be about to heat up.

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Contracts on the S&P 500 slid 0.8%, while those on the Nasdaq 100 dropped 1.1% as several US and European companies signaled that tariffs will damage profits. Meanwhile, the European Union plans additional tariffs on about €100 billion ($113 billion) in US goods should ongoing trade talks fail, people familiar with the matter told Bloomberg News.

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In New York premarket trading, Palantir Technologies Inc. fell as much as 8% after the software firm’s results failed to meet expectations, while Ford Motor Co. slipped 2% after the carmaker pulled its financial guidance. Tesla Inc. led declines among the Magnificent Seven tech megaps, as the EV maker’s European sales plummeted further.

The moves suggest that a recent burst of optimism fueled by some US trade concessions may already be fading. On Monday, the S&P 500 halted a nine-day rally that was its longest in about 20 years. While Ford’s warning served as a reminder that damage from the tariff war will become evident over the coming months, a run of firm economic data in recent days has caused traders to dial back bets on Federal Reserve interest-rate cuts.

On Tuesday, data showed the US trade deficit widened to a record $140.5 billion in March.

“For us, it’s not the moment to add on risk,” said Nicolas Sopel, a strategist at Quintet Private Bank. “Even if there are successful negotiations between the US and China, tariffs will most likely be a lot higher than they were before Trump came into power.”

“We will need time to see how deeply these increases impact the US economy,” according to Sopel, who has reduced US equity exposure.

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In Europe, Germany’s DAX equity benchmark dropped as much as 2.1% after incoming German chancellor Friedrich Merz failed to win parliamentary backing to confirm him in his role. While Merz is expected to be eventually elected, the shock setback exposes the coalition’s wafer-thin majority. The Stoxx 600 benchmark snapped a 10-day run of gains to drop 0.3%.