U.S. stock index futures decline: Market sentiment is cautious after the trade agreement, and the three major indices pull back from their highs.

After the US and China announced a 90-day tariff suspension agreement, US stocks surged early in the week. However, as of 1:30 PM Taipei time, May 13, 2025, US stock index futures retreated. Dow Jones Industrial Average futures fell 104 points to 42,389, S&P 500 futures dropped 20.5 points to 5,844.5, and Nasdaq 100 futures decreased 88.75 points to 20,860. Market sentiment turned cautious as investors reassess the real impact and risks of the trade agreement.

US-China Tariff Suspension Spurs Market Surge

Earlier this week, the United States and China announced mutual tariff reductions, initiating a 90-day trade truce, which spurred a significant rise in global stock markets. According to The Globe and Mail, on Monday, the three major US stock indices soared, with the S&P 500 index rising 3.26%, the Dow Jones Industrial Average up 2.81%, and the Nasdaq 100 index surging 4.02%, reaching a new high in over two months. The futures market also reflected this optimistic sentiment, with S&P 500 E-mini futures up 3.32%, Nasdaq 100 E-mini futures up 4.03%, and Dow E-mini futures rising 2.16%.

This surge is seen by the market as a positive reaction to the easing of US-China trade tensions. US President Trump recently stated publicly that "now is a good time to buy stocks," and a few days later reached a tariff suspension agreement with China, further strengthening market expectations of a policy shift. According to AASTOCKS, the S&P 500 index rose 14% within a month after Trump's April 9 post, marking the largest 21-day trading gain during his tenure.

Correction Pressure After Technical Rebound

However, as short-term positive factors are exhausted, signs of profit-taking have begun to appear in the market. According to MoneyDJ's report at 13:30 Taipei time, all three major index futures retreated from their highs, with Dow Jones Industrial Average futures down 104 points, S&P 500 futures down 20.5 points, and Nasdaq 100 futures down 88.75 points. Earlier data at 12:33 also showed Dow futures once fell to 42,367 points, a drop of 126 points, indicating increased market volatility.

This pullback may be related to investors' cautious attitude towards the substantive content of the trade agreement. Although both sides agreed to suspend most tariffs, a 10% tariff space remains, and the agreement is only for 90 days. According to AASTOCKS citing Singular Bank's Chief Strategist Roberto Scholtes, even if an agreement is reached, companies still find it difficult to escape the pressure brought by policy uncertainty. On average, 6.1% of S&P 500 companies' revenue comes from China, and the back-and-forth trade policy poses challenges to business operations.

Divergent Investor Sentiment, Some Companies Lower Forecasts

Despite the overall bullish market sentiment, some companies have begun to take a more conservative outlook on the future. According to AASTOCKS, companies like UPS, Ford, and Mattel have withdrawn their forecasts, citing the increasing difficulty in operational estimates due to trade policy uncertainty. David Kruk, Head of Trading at La Financiere de L’Echiquier, stated, "There's nothing left to 'buy on the dip.' Those who missed this rebound will feel the pain."

Additionally, the U.S. Dollar Index (DXY) and U.S. 10-year Treasury yield rose simultaneously, indicating that funds may be shifting from the stock market to other assets. According to Coindesk, the U.S. Dollar Index (DXY) rose 1.14% to 101.48, and the U.S. 10-year Treasury yield increased to 4.44%. Meanwhile, gold and safe-haven currencies like the yen and Swiss franc fell, reflecting a market adjustment after a temporary rise in risk appetite.

Tech Stocks Lead Gains, Then Pull Back, Funds Reallocate

In this latest rebound, tech stocks performed particularly well. According to The Globe and Mail, Amazon rose over 8%, Meta Platforms increased by more than 7%, Apple and Tesla each rose over 6%, and Nvidia and Alphabet also saw gains of over 3%. The strong performance of these "seven giants" pushed the Nasdaq 100 index close to entering a technical bull market.

However, as short-term gains expanded, some funds began to shift to other assets or take profits. BNY Mellon Senior Strategist Geoffrey Yu pointed out that although the market reacted optimistically to the trade agreement, the worst-case scenario has been dismissed by the market, and funds will be reallocated. This may also be one of the reasons for the pullback in the futures market.

U.S. stock index futures decline: Market sentiment is cautious after the trade agreement, and the three major indices pull back from their highs.

Key Updates

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Futures for the three major U.S. stock indices simultaneously declined: Dow futures fell more than 90 points as investors pay attention to inflation data.