Investing.com - U.S. stock futures retreat Monday amid recession fears, ahead of the release of the latest retail sales data, a key gauge of the health of the American consumer. The Chinese economy shows signs of life, while the American Chamber of Commerce to the EU warned of the potential damage to transatlantic trade.
1. Futures fall on ‘recession’ fears
U.S. stock futures slipped lower Monday, continuing to weaken amid concerns over the economic health of the world’s largest economy.
At 04:10 ET (08:10 GMT), the S&P 500 futures had edged down by 34 points, or 0.6%, Nasdaq 100 futures had fallen by 113 points, or 0.6%, and Dow futures had dropped by 234 points, or 0.6%.
Driving Monday’s weakness was an interview U.S. Treasury Secretary Scott Bessent conducted with NBC on Sunday, in which he said there were "no guarantees" that the U.S. economy will avoid recession this year.
This came just a week after U.S. President Donald Trump declined to rule one out.
The main Wall Street indices have struggled of late, with the Nasdaq Composite sinking deeper into correction territory last week, while the S&P 500 briefly dipped into a correction as well.
Investors have struggled with the uncertainty surrounding the Trump administration’s tariff policies, fearing that a trade war could hit economic activity drastically.
2. Tariffs could jeopardize $9.5 trillion of U.S./EU business
The potential trade war between the U.S and Europe could jeopardize transatlantic business worth $9.5 trillion annually, the American Chamber of Commerce to the EU warned on Monday.
In the past week, the Trump administration has imposed tariffs on steel and aluminium, while the EU has set out plans for retaliation and President Donald Trump has threatened 200% tariffs on EU wine and spirits.
Trump has railed against the U.S. goods trade deficit with the EU, although in services there is a U.S. surplus, and urged manufacturers to produce in America.
The American Chamber of Commerce to the EU has released its annual Transatlantic Economy report, and warns of 2025 as a year of promise and peril for the world’s largest commercial relationship.
The group said trade is only part of transatlantic commercial activity and that the real benchmark was investment.
"Contrary to conventional wisdom, most U.S. and European investments flow to each other, rather than to lower-cost emerging markets," it said.
It warned ripple effects from the trade conflict could damage these close ties.
3. U.S. retail sales to rebound
On the economic calendar, markets will be eyeing the release of U.S. retail sales for February, for a gauge of the health of the American consumer.
The preliminary measure for February is expected to rise 0.6% on the month, rebounding from the prior month’s hefty 0.9% fall - the largest month-over-month decline in retail sales since January 2024.
However, even with this expected rebound, sentiment remains weak with American consumers fretting over the negative effects of Trump’s tariffs on their purchasing power.
Additionally, retailers from Walmart (NYSE:WMT) to Home Depot (NYSE:HD) have outlined cautious annual targets as still-high inflation forces Americans to spend less.
4. Signs of Chinese economic growth
There have been some signs of life in the Chinese economy, as policymakers attempt to boost economic activity even as the Chinese economy faces fresh U.S. tariff pressure.
Retail sales, a gauge of consumption, rose 4.0% in the January-February period, better than a 3.7% rise in December and marking the quickest rate since November 2024.
Additionally, China’s industrial output rose 5.9% in the first two months of the year from a year earlier, official data showed on Monday, slowing from a 6.2% expansion in December but beating market expectations.
A day earlier, the State Council unveiled what it called a "special action plan" to boost domestic consumption, featuring measures including increasing residents’ income and establishing a childcare subsidy scheme.
China has been grappling with sluggish economic activity since the COVID-19 pandemic.
5. Oil rises after U.S. strikes on Houthis
Oil prices rose Monday, buoyed by the potential for supply disruptions, after the U.S. launched a series of strikes against Yemen’s Houthis, vowing to continue attacking until the Iran-aligned group ends its assaults on shipping.
The Houthis have a history of targeting commercial vessels in the Red Sea, a crucial corridor for global commerce, accounting for about 15% of the world’s shipping traffic.
The heightened conflict has raised concerns over potential disruptions to vital shipping routes in the Red Sea, leading to a notable impact on global oil markets.
Elsewhere, U.S. President Donald Trump said on Sunday that he will speak to Russian counterpart Vladimir Putin on Tuesday, as his administration works to broker peace between Russia and Ukraine.
Ukraine last week accepted a tentative ceasefire deal proposed by the U.S. at talks happening in Saudi Arabia, although it was unclear what the terms were.