Dow Jones Industrial Average futures dropped 253 points, indicating a loss of 251 points at the open. S&P 500 futures fell 26 points while Nasdaq 100 futures declined 89 points.
“The trade landscape looks bleaker than ever,” said Adam Crisafulli, executive director at J.P. Morgan, in a note. “Anyone bullish on the SPX has to be conducting a lot of soul searching at the moment.”
Crisafulli also pointed out that flash PMIs indicate that an economic rebound from earlier this year is “showing signs of attenuating” while the Federal Reserve is in no hurry to cut rates.
U.K.-based chip designer Arm Holdings said it suspended business with Huawei to comply with the U.S. blacklisting of the telecom company. Panasonic also said it stopped shipping some smartphone components to Huawei. Vodafone and BT Group, the biggest phone carriers in the U.K., said they are removing Huawei phones from their 5G network plans.
At the same time, China is taking a stronger tone in its rhetoric towards the U.S. Ministry of Commerce spokesperson Gao Feng said: “If the U.S. would like to keep on negotiating it should, with sincerity, adjust its wrong actions. Only then can talks continue.”
“The U.S. … crackdown on Chinese companies not only seriously damages the normal commercial cooperation between both countries, but it also forms a great threat to the security of the global industrial and supply chain,” Feng added.
Shares of Qualcomm fell 2.9% while Xilinx declined 1.9%. Micron and Lam Research declined 2.2% and 1.8%, respectively.
Apple shares also fell 1.7% after a UBS analyst cut his price target on the iPhone maker to $225 per share from $235. The analyst kept his buy rating on the stock, but noted that “a slightly lower multiple is prudent given soft smartphone market and ongoing US/China trade issues.”
The U.S. and China have imposed tariffs on billions of dollars’ worth of one another’s goods since the start of 2018, battering financial markets and souring business and consumer sentiment. Tensions ratcheted up earlier this month with both sides hiking tariffs on their goods. This has led the S&P 500 to fall 3% for the month through Wednesday’s close.
Meanwhile, investors are likely to monitor a flurry of economic data reports on Thursday. The latest weekly jobless claims data are set to be published at around 8:30 a.m. ET, followed by a flash reading of manufacturing and services PMI figures for May.
New home sales for April and Kansas City Fed survey data for May are both scheduled for release later in the session.