Trump’s Tariff Threat Triggers Sharp Equity Slide

E-mini S&P (June) / E-mini NQ (June)

S&P, yesterday’s close: Settled at 5856.75, down 4.50

NQ, yesterday’s close: Settled at 21,178.25, up 21.50

E-mini S&P and E-mini NQ futures dove lower this morning after President Trump threatened a 50% tariff on the European Union and specifically targeting Apple with a 25% tariff on iPhones not made in the U.S. Make no mistake, price action was already on soft footing, consolidating below significant resistance in the E-mini S&P at 5905-5912.50 and the Sunday night low of 5892.75. Yesterday, we discussed how a close above these levels is needed to begin repairing the damage. At the same time, the pullback was a healthy relief of overbought conditions, allowing the market to digest the recent run.

Notably, fresh May flash PMIs came in stronger than expected yesterday, with Manufacturing at 52.3 versus 49.9 and Services at 52.3 versus 51.0. Despite the surprise beats, Treasuries rallied, staving off some fears around the Moody’s downgrade, the new spending bill, and the poor 20-year auction.

Today’s leg lower begins to push the limit of a healthy pullback. On the other hand, there is a critical area of support aligning with the close from Friday, May 9th, prior to the U.S.-China trade truce. This comes in at 5662.50-5690 in the E-mini S&P and 20,136-20,277 in the E-mini NQ. For now, price action did take out major three-star support that was not tested yesterday, and this will become a pivot area of resistance that we must see the market close above to simply neutralize the worst of today’s move, coming in at…