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S&P 500 Futures Dive As Trump Mulls $100 Billion In New China Tariffs

S&P 500 futures abruptly sold off late Thursday, as President Donald Trump said he may impose tariffs on an additional $100 billion of Chinese imports, citing China’s “unfair retaliation” for his initial tariffs on $50 billion of Chinese goods. Futures for the Dow Jones industrial average and Nasdaq 100 also tumble.

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The major averages have rallied for three straight sessions, in large part on indications that the U.S. and China would negotiate a trade settlement. The S&P 500 and other major averages have been rising on increasingly declining volume.

“In light of China’s unfair retaliation, I have instructed the USTR to consider whether $100 billion of additional tariffs would be appropriate under section 301 and, if so, to identify the products upon which to impose such tariffs,” Trump said in a statement.

The White House detailed its tariff plan Tuesday night, with a 25% duty on Chinese goods, mostly tech and telecom products. Beijing, which had vowed to fight back blow for blow, the next day slapped a 25% tariff on $50 billion in U.S. goods. The targets include. soybeans, corn, airplanes and automobiles.

S&P 500 Futures Plunge On Trade War Fears

S&P 500 futures fell 1% vs. fair value. Dow Jones futures sold off 1.2%. Nasdaq 100 futures were down 1.1%. However, those were already off their worst levels.

Boeing (BA) retreated 3.3% as the Dow Jones aerospace giant could lose China sales if a trade war heats up.

Keep in mind that overnight trading in stock market futures and individual stocks often doesn’t translate into how the regular session unfolds. Stock futures plunged early Wednesday after China announced its retaliatory tariffs, but the major averages rallied to close with solid gains.

Before Friday’s open, investors will get the March employment report, with wage growth in focus.

Retaking The 50-Day Line

Apple (AAPL) and Netflix (NFLX) are among the many big techs that have reclaimed 50-day moving averages in below-average volume this week. But software stocks Adobe Systems (ADBE), Workday (WDAY) and Atlassian (TEAM) have all retaken that key support line this week in above-normal trade.

Those solid moves above key support indicate institutional support for Adobe, Workday and Atlassian. Conversely, lackluster volume for the S&P 500, Apple and Netflix suggests that mutual funds are withholding judgment on the rally attempt and those two household names.

Software Stocks Are Hot

Adobe, Workday and Atlassian are all in a hot sector: business software. Enterprise software and related groups have been market leaders in recent months. Industry group strength is an important factor to consider when looking for stocks to buy.

Meanwhile, the three stocks are highly rated. Adobe and Workday have best-possible 99 Composite Ratings, while Atlassian has a 97 Composite Rating. The Composite Rating combines several proprietary ratings into one score. All-time winners often have Composite Ratings of at least 95 near the start of their big runs.

Adobe and Atlassian are both on the IBD 50 stock list.

Adobe Systems’ relative strength line, which tracks a stock’s performance vs. the S&P 500 index, is near record highs. The RS lines for Workday and Atlassian have eased modestly in the past few weeks, but after solid uptrends.

All three stocks need to consolidate for a few more weeks before forming proper bases and related buy points. The stock market is still in a correction, which makes any new buys iffy. But they are all worth watching.

Apple and Netflix also are worth watching. Netflix was just added to IBD Leaderboard Thursday.

However, Apple fell 2% and Netflix 3% in late trade as S&P 500 futures tumbled. Adobe also lost 2%. Workday retreated 3%. Atlassian was not active.

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