Nasdaq Futures Drop As Traders Await Tariff News, Powell Speech — Strategist Backs Small-Caps In 'New Bull Market'

U.S. stocks look set to open the week on a weaker note as investor caution returns following renewed trade tensions. At a rally in Pennsylvania, President Donald Trump took a tougher stance on tariffs, vowing to double current rates to 50% to secure the domestic industry.

Traders also look ahead to key economic reports that provide more economic cues.

Trump administration officials expressed hopes that talks between President Trump and Chinese Premier Xi Jinping will happen soon and facilitate a trade deal with the country. 

As of 12:16 a.m, ET on Monday, the Nasdaq 100 futures slid 0.64% and the Russell 2000 futures fell 0.60%. The S&P 500 futures and the Dow futures were down 0.46% and 0.36%, respectively. 

Crude oil futures rallied 2.70% in the Asian session as traders took stock of the OPEC+ output hike, which was of similar magnitude as in June, as opposed to expectations for a bigger increase.

Gold futures rose moderately, and the dollar was lower, while the 10-year Treasury note yield edged down to 4.416%.

Major Asian markets were lower across the board.

The week’s economic calendar is heavily loaded with labor market data and speeches by Federal Reserve officials. Traders will likely be keenly watching the May non-farm payrolls report, ADP’s private payrolls report, the April Job Openings and Labor Turnover Survey (JOLTS) results, and the weekly jobless claims report.

Also on tap are the May S&P Global and Institute for Supply Management’s (ISM) private sector activity reports, the April trade balance report, and the Federal Reserve’s Beige Book report, which is typically released two weeks before the central bank’s rate-setting meeting.

On Monday, the S&P’s final manufacturing purchasing managers’ index (PMI) for May is due at 9:45 a.m., followed by the ISM’s manufacturing PMI at 10 a.m. ET.

The Commerce Department will release its construction spending report at 10 a.m. ET.

Fed Chair Jerome Powell is scheduled to give the opening remarks at the Fed’s International Finance Division 75th Anniversary Conference in Washington, D.C., at 1 p.m. ET. In his meeting with Trump last week, the central bank chief stressed that the path to Fed policy will depend entirely on incoming economic information.

Dallas Fed President Lorie Logan and Chicago Fed President Austan Goolsbee are also scheduled to make public appearances on Monday.

Campbell Soup (CPB) and Science Applications (SAIC) are among the companies due to report on Monday.

Fund Strat’s Tom Lee said in an interview with CNBC that the “miniature bear market” has essentially rebirthed a new bull market. He also said any dips from now on will be “pretty shallow,” as he premised his optimism on the benefits of potential deregulation and new tax benefits. 

“While a lot of people are calling a top, I actually think that this is more of a mid-cycle kind of start of a new bull market,” he added.

Lee also favored small-caps. The strategist said, “As I look at the second half, I think the small caps really have a strong case to be made, because as long as we move towards a tariff resolution, or the markets feel that way, then I think investors can actually start putting flows back into stocks other than the Mag Seven.”

Stocks advanced in the week ended May 30, with the U.S.’ trade deal with the European Union, Nvidia Corp.’s (NVDA) earnings, and a few positive economic data points underpinning sentiment. On the tariff front, an appeals court stayed a trade court ruling that suspended Trump tariffs, confounding the outlook. 

The Invesco QQQ Trust (QQQ) ETF and the SPDR S&P 500 ETF (SPY) rose 1.9% and 1.8%, respectively, in the truncated week ended May 30 that encompassed the Memorial Day holiday on Monday.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) added 1.6%, and the iShares Russell 2000 ETF (IWM) rose 1.2%.

The major averages rebounded in May from April’s slump, with the S&P 500 Index, the Nasdaq Composite, and the Dow Jones Industrial Average ending the month up 6.2%, 9.6%, and 3.9%, respectively.

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