Nasdaq Index: Tech Stocks Lead Sell-Off, Volatility Surges on China Trade Risk

S&P 500 Futures Slide Nearly 1% as Renewed China Tensions Rattle Wall Street

U.S. equity futures dropped sharply Tuesday, with E-mini S&P 500 Index futures down nearly 1% after the open, as rising trade tensions between the U.S. and China reignited a broad market sell-off.

In the cash market, the S&P 500 lost 1.3%, the Dow fell 504 points, and the Nasdaq dropped close to 2%, led by heavy declines in AI and tech stocks.

Is China’s Latest Move the Spark Behind the Sell-Off?

China escalated trade tensions by sanctioning five U.S. subsidiaries of South Korea’s Hanwha Ocean, barring Chinese entities from doing business with them.

The Chinese government framed the sanctions as a national security measure, prompting U.S. Treasury Secretary Scott Bessent to respond that the move reflects China’s economic stress and desire to pull other economies down.

This comes on the heels of President Trump’s threat of a 100% tariff on Chinese goods, though he later softened his stance in a Truth Social post that helped spark Monday’s rally.

Which Stocks Are Taking the Biggest Hit?

Nvidia lost over 3%, while Tesla and Oracle dropped 2.5% and 1.4%, respectively, underperforming the broader market. General Motors slid 1.7% after announcing a $1.6 billion charge tied to reduced EV production plans. Ford sank 5% after a fire at a key aluminum supplier paused output on multiple vehicle lines.

Rare earth miners extended their rally on expectations of increased U.S. investment in domestic supply chains. Energy Fuels jumped 12%, MP Materials gained 7%, and USA Rare Earth advanced 11%. Polaris soared 10% after announcing a spinoff of its Indian Motorcycle division.

How Did Major Banks Perform This Quarter?

Wells Fargo rose 2.5% following stronger-than-expected earnings of $1.66 per share on $21.44 billion in revenue, beating analyst estimates. JPMorgan Chase gained 0.2% after reporting record trading revenue of nearly $9 billion. Citigroup advanced 0.3%, delivering $1.86 per share on $22.09 billion in revenue.

Goldman Sachs beat on both top and bottom lines, posting $12.25 per share and $15.2 billion in revenue versus expectations of $11 and $14.1 billion, respectively, but edged down 0.3%. BlackRock dipped 0.3% despite earnings of $11.55 per share and $6.51 billion in revenue, both above estimates.

What Are the Key Technical Levels in Play?

E-mini S&P 500 futures faced resistance at 6718.50 before retreating. The upper resistance zone is set between 6676.25 and 6708.25. Key support lies at the 50-day moving average of 6697.85. If that fails, prices may fall to the longer-term pivot at 6554.75 or Friday’s low at 6540.25.

What’s the Market Outlook From Here?

With the Cboe Volatility Index climbing above 22 to a four-month high, hedging activity has picked up. While corporate earnings offer some stability, the renewed U.S.-China trade conflict remains the primary risk catalyst.

Traders are watching for further government actions and any commentary from Federal Reserve officials that could influence sentiment.

More Information in our Economic Calendar.