The Morning Report, 2-20-2025

Excitement is in the air as U.S. stock index futures took a dip on Thursday, with investors showing a bit more caution after President Donald Trump reignited tariff discussions. Geopolitical tensions and a watchful Federal Reserve added to the mix, creating a thrilling market atmosphere!

On Wednesday, Trump made waves by announcing plans to roll out new tariffs within the next month, broadening the scope to include lumber and forest products, alongside previously declared tariffs on imported cars, semiconductors, and pharmaceuticals.

Since taking office four weeks ago, Trump has stirred the pot by implementing an extra 10% tariff on all Chinese imports and announcing, then delaying for a month, 25% tariffs on goods from Mexico and non-energy imports from Canada.

Last week, he unveiled a bold move to impose reciprocal tariffs on all nations that have tariffs on U.S. products, shaking up the global trade landscape!

As speculation swirls about a potential peace agreement between Russia and Ukraine, Trump didn't hold back, labeling Ukrainian President Volodymyr Zelenskiy a "dictator" and urging swift action to secure peace, or risk losing his nation.

Traditional safe-haven assets like gold and the Japanese yen surged, while Treasury yields, moving inversely to prices, took a dip, adding to the financial drama.

Meanwhile, the Federal Reserve's January policy meeting minutes revealed on Wednesday that Trump's initial policy proposals sparked inflationary concerns at the central bank.

Policymakers agreed to keep interest rates steady until they see clear signs that inflation, largely stagnant since mid-2024, would reliably hit the central bank's 2% target.

The S&P 500 hit a record closing high for the second time this week on Wednesday, as markets digested the Fed's meeting minutes and Trump's bold initiatives.

"Trump continues to roll out new policy plans on various fronts, but the broader financial market reactions to these plans have been relatively muted lately," analysts at Nordea observed.

"With all the uncertainties involved, it's too early to draw definitive conclusions on the outcomes."

Anticipation is building for the weekly jobless claims report and statements from at least four Federal Reserve officials, including Chicago Fed President Austan Goolsbee, expected later today.

Results from retail giant Walmart, a key indicator of American consumer health, are eagerly awaited before the market opens.

Toymaker Hasbro and Chinese e-commerce powerhouse Alibaba are among other major firms set to report earnings before the market opens.

At 4:46 a.m. ET, Dow E-minis were down 60 points, or 0.13%, S&P 500 E-minis were down 13.5 points, or 0.22%, and Nasdaq 100 E-minis were down 64.5 points, or 0.29%.

Most megacap and growth stocks saw declines in premarket trading, but Microsoft stood out with a 1% increase.

On Wednesday, Microsoft unveiled a groundbreaking new chip, declaring that quantum computing is "years, not decades" away, sparking excitement in the tech world!

Palantir Technologies, known for providing software services to governments, including visualizing military positions, saw a 2.2% drop after the Pentagon announced on Wednesday it was considering potential budget cuts for fiscal year 2026.