Dow, Nasdaq 100 Retreat on Trump Tariff Escalation; Tesla Earnings Up Next

Trump Threatens 155% Tariffs, Sending Markets Lower

US stock futures faced early selling pressure after President Trump renewed threats to impose higher tariffs on Chinese shipments.

CN Wire reported:

“US President Donald Trump announced on Tuesday (local time) that the US will move forward with plans to impose a 155% duty on Chinese imports beginning November 1, despite expressing a desire to maintain amicable ties with Beijing.”

Trump’s attempts to curb global reliance on Russian oil have failed to persuade Beijing to diversify its energy sources, giving the US President further justification to hike levies.

CN Wire added:

“He added that years of one-sided economic dealings have left the US with no choice but to take firm action, blaming previous administrations for allowing China and other countries to take advantage of the US. Trump also pointed to his earlier trade deals with the EU, Japan, and South Korea, highlighting his use of tariffs as a tool for national security.”

Asian equity markets joined US stock futures in the red. The Hang Seng Index was down 0.59%, with Mainland China’s CSI300 and the Shanghai Composite Index also facing early losses.

The latest US-China trade headlines suggest tense talks at the APEC Summit. However, US Treasury Secretary Scott Bessent will be meeting with China’s Vice Premier He Lifeng this week, setting the stage for the APEC Summit meeting.

Japanese Exports Rebound, Reflecting the Impact of Tariffs on Demand

While markets remain focused on US-China trade headlines, Japanese economic data suggested a sharp rebound in demand. Exports jumped 4.2% year-on-year in September after dropping 0.1% in August, while imports rose 3.3%. The rebound in demand followed August’s US-Japan trade deal. The US lowered levies on Japanese goods to 15%.

The rebound in demand highlighted the impact of higher duties on trade terms and Japan’s broader economy. A 155% tariff on Chinese shipments could fuel fears of a full-blown trade war, potentially affecting the global economy and risk sentiment.

US Stock Futures Dip on Shifting Risk Sentiment

The latest escalation in the US-China trade war overshadowed bets on multiple Fed rate cuts, weighing on US stock futures.

The Dow Jones E-mini fell 16 points in early trading on Wednesday, October 22, while the Nasdaq 100 E-mini dropped 41 points, and the S&P 500 E-mini declined 2 points.

Wednesday morning’s losses were modest, reflecting strong market bets on October and December Fed rate cuts.

According to the CME FedWatch Tool, the probability of back-to-back 25-basis point Fed rate cuts in October and December stands at 98.9% and 98.7%, respectively.

With the US government shutdown extending into its third week, the prolonged disruption could support more aggressive Fed rate cuts.. The 2018-2019 shutdown shaved roughly 0.4% off GDP. However, traders will need the US Senate to pass a stopgap funding bill and access to key US data, including the jobs report, to project the Fed’s rate path past October.

US-China Headlines, Earnings, and Capitol Hill in Focus

Across the Pacific, US tariff threats will continue to influence risk appetite. However, traders should closely monitor developments on Capitol Hill and earnings.

Corporate earnings will take center stage, spotlighting the Nasdaq. Tesla (TSLA) is on the earnings calendar.

Meanwhile, a continued US Senate impasse would delay key US economic data reports, supporting bets on multiple Fed rate cuts. The market may turn cautious if the Senate stalemate ends, as government offices could quickly release delayed data.

Key Technical Levels for Dow Jones, Nasdaq 100, and S&P 500

Despite the morning losses, US stock futures traded above the 50-day and 200-day Exponential Moving Averages (EMAs), reaffirming bullish momentum.

However, the near-term trends remain dependent on US—China trade headlines, corporate earnings, and the US Senate. Key levels traders should monitor include:

Dow Jones

• Resistance: the October 21 record high of 47,334, then 47,500.
• Support: 47,000, 46,750, 46,500, the 50-day EMA (46,024).

Nasdaq 100

• Resistance: October 9 record high of 25,394, 25,500.
• Support: 25,000, 24,500, the 50-day EMA (24,409).

S&P 500

• Resistance: October 9 record high of 6,812 and 7,000.
• Support: 6,750, the 50-day EMA (6,614).

October Market Outlook: Trump, Earnings, and Capitol Hill in Focus

The mixed signals from uncertain progress in US-China trade negotiations and Trump’s latest tariff threat keep markets on edge. However, rising bets on multiple Fed rate cuts will continue to bolster demand for risk assets.

Beyond China and the Fed, corporate earnings will steer sentiment, though any boost may prove short-lived.

Follow our live coverage and consult the economic calendar for real-time market updates.