U.S. equity futures extended declines in early Tuesday trading, while Treasury yields and the dollar held steady, as investors backed away from riskier markets amid renewed trade-war concern while they eyed the start of the Federal Reserve’s two-day policy meeting in Washington.

Stocks ended lower on Monday, with the S&P 500 snapping its nine-day winning streak, the longest in more than two decades, amid concern about the impact of President Donald Trump’s trade and tariff policies on the world’s biggest economy.

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Stronger-than-expected first-quarter earnings for the benchmark, which have improved by a collective $12 billion since reporting began last month, have supported stocks in their solid rally over the past two weeks. They have helped the index reclaim most of the losses it endured since April 2, when Trump unveiled what he called his Liberation Day tariffs.

However, Ford Motor  (F)  yesterday warned of a $1.5 billion hit to profits and pulled its full-year guidance, and a host of other companies have issued caveats to their near-term outlooks. These warnings have prompted investors to worry whether second-quarter profit-growth estimates will remain valid. 

Federal Reserve Chairman Jerome Powell and his colleagues will begin their two-day policy meeting later today in Washington.

Anna Moneymaker/Getty Images

Trump is also threatening new levies on the pharmaceutical sector, which has stocks  such as Eli Lilly  (LLY)  and Pfizer  (PFE)  trading lower in the premarket. And despite some fulsome comments from Treasury Secretary Scott Bessent yesterday in Los Angeles, there is little evidence of an emerging trade deal with China over the coming weeks. 

Investors are also paring bets on near-term support from the Federal Reserve, which will unveil its latest policy decision Wednesday in Washington, because the job market remains resilient and price pressures in the broader services economy have accelerated. 

“Traders appear to be taking profits and moving to the sidelines ahead of the Federal Reserve meeting, which kicks off today,” said David Morrison, senior market analyst at Trade Nation.

“Overall, US stock indices are pulling back from last week’s highs. Traders look to be using the bounce since last month’s tariff tantrum as an opportunity to reduce their market exposure,” he added. “The question now is whether the indices consolidate at lower levels before another push higher, or if we can expect any rallies to be used as selling opportunities.”

A weaker stock-market opening expected

Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 are priced for an opening bell decline of around 32 points, with the Dow Jones Industrial Average called 200 points to the downside.

The tech-focused Nasdaq, meanwhile, is called 166 points lower with Tesla  (TSLA)  Palantir  (PLTR)  and Nvidia  (NVDA)  active in premarket trading.  

Benchmark 10-year Treasury note yields were holding at 4.356% ahead of a $42 billion auction in new paper later this afternoon, while 2-year notes were pegged at 3.822%.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, slipped 0.09% and was last marked at 99.744.

More Economic Analysis:

• Fed inflation gauge sets up stagflation risks as tariff policies bite
• U.S. recession risk leaps as GDP shrinks
• Like it or not, the bond market rules

In overseas markets, Germany’s DAX performance index fell 1% after lawmakers failed to vote approval for Friedrich Merz as the country’s new chancellor for the first time since World War II, while the regional Stoxx 600 benchmark slipped 0.57%.

Overnight in Asia, markets in Japan remained closed for the annual run of May holidays, while the MSCI ex-Japan index slipped 0.06% into the close of trading.