• S&P 500 and Nasdaq 100 futures drop 0.6%, Dow futures down 0.5% as markets pause after strong rally.
  • Trade policy whiplash continues after court strikes down Trump-era tariffs, creating fresh uncertainty.
  • Nvidia's record earnings fail to sustain momentum as investors weigh tariff impacts on corporate margins.

Market Retreat After Tech-Led Rally

U.S. stock futures pulled back sharply early Friday, with S&P 500 E-mini and Nasdaq 100 contracts falling 0.6% each while Dow futures declined 0.5%. The move follows several days of gains fueled by blowout earnings from AI leader Nvidia and other tech giants, with the Nasdaq having surged nearly 10% in May through Thursday's close.

"The market was due for a breather after such a powerful run," said one trader at a major investment bank who asked not to be named discussing client positions. "Now we're seeing real hesitation about whether the trade policy landscape is stabilizing or about to get more chaotic."

Trade Policy Whiplash

The pullback coincides with fresh uncertainty after a federal court invalidated most Trump-era tariffs this week, upending ongoing negotiations between the U.S. and trading partners. The ruling directly affects billions in imported goods and comes as the Biden administration weighs new tariffs on strategic sectors like clean energy and semiconductors.

Treasury yields edged lower as money flowed into haven assets, with the 10-year note yield falling 2 basis points to 4.46%. The dollar held steady against major currencies after Thursday's volatility.

Earnings vs. Macro

While Nvidia's 69% revenue jump to $44 billion had powered recent gains, analysts note the chipmaker's results may have marked a short-term peak for the AI trade. "The question now is whether other sectors can pick up the baton," said a portfolio manager at a $50 billion asset manager. "Tariff uncertainty makes that harder when you're talking industrials, autos or consumer goods."

Futures pared some losses after the open of European trading, where stocks rose modestly. Attention now turns to upcoming U.S. inflation data and whether Japan's rising price pressures will force a rate hike - either of which could reignite volatility.