US stock futures trended lower early Thursday, reflecting growing skepticism about the economy’s resilience to elevated tariff levels under President Trump. Dow futures remained flat while S&P 500 and Nasdaq 100 futures each slipped by 0.1% and 0.2%, respectively. The shift in sentiment came after days of marginal gains and coincides with rising concerns over trade volatility and softening domestic indicators.
Highlights:
S&P 500 futures dipped 0.1%, Nasdaq 100 futures fell 0.2%.
Dow futures held near baseline, indicating cautious trading.
Market focus shifts from optimism to risk amid tariff strain.
Treasury Yields Fall on Weak Jobs and Services Data
Markets responded sharply to disappointing economic data released Wednesday. The ADP National Employment Report showed private payrolls rose by just 37,000 — the weakest gain in over two years. At the same time, the Institute for Supply Management’s (ISM) Services PMI fell into contraction territory at 49.9. These signals caused the 10-year and 30-year Treasury yields to sink nearly 10 basis points, as investors moved into safer assets.
Highlights:
ADP report: Private sector added only 37,000 jobs, far below forecast.
ISM Services PMI fell to 49.9, indicating sector contraction.
10-year yield dropped to 4.36%, lowest since early May.
Trump Urges Rate Cuts, Escalates Tariff Strategy
President Trump intensified pressure on Federal Reserve Chair Jerome Powell to cut interest rates after the ADP report release. Simultaneously, Trump’s newly enacted steel and aluminum tariffs — now doubled to 50% — took effect, sparing only the UK. The administration also set a deadline for trade partners to submit “best offers” or face further reciprocal tariffs in July, deepening trade tensions.
Highlights:
Trump lashes out at Fed chair, calls for immediate rate cuts.
Steel and aluminum tariffs raised to 50%, UK exempted.
Deadline set for new trade offers, with more tariffs looming in July.
Business Optimism Drops Sharply in 2025
New survey data from the Association of International Certified Professional Accountants (AICPA) shows executive confidence is plummeting. Just 27% of business leaders feel optimistic about the economic outlook over the next 12 months — down from 67% after the 2024 election. Many companies are delaying hiring and investment while reassessing key performance targets. One in five executives believe the US is already in a recession, with another 34% expecting one by year-end.
Highlights:
Executive confidence plunged from 67% to 27% in six months.
Over 50% of business leaders foresee a recession in 2025.
Widespread caution prompts hiring freezes and strategic delays.
Trade Uncertainty Muting Market Reactions
Despite escalating tariffs, stock market volatility has remained relatively subdued in recent sessions. Analysts from Barclays and Morgan Stanley attribute this to investor fatigue over repeated tariff threats and a broader realization that headline risks may not immediately translate into economic fallout. The CBOE Volatility Index (VIX) and Bloomberg’s Trade Policy Uncertainty Index have both declined, indicating that markets are pricing in a more stable short-term outlook — even if underlying risks persist.
Highlights:
Market volatility has eased despite negative trade news.
Investors increasingly discount tariff headlines.
VIX and Trade Policy Uncertainty Index both moving lower.
Signs of a Broader Pause in US Economic Activity
Jefferies economist Tom Simons noted recent data points to a “pause in activity” rather than a deep downturn. Both the services and manufacturing sectors show contraction in May, while imports dropped to their lowest level since 2009. The uncertainty over tariffs is prompting companies to stall operations and hiring, not just in anticipation of rising costs but amid strategic ambiguity about future policy direction.
Highlights:
Services and manufacturing both contracting in May.
Imports hit 2009 lows, highlighting trade impact.
Economic activity stalls amid tariff-induced uncertainty.
