US STOCKS-Wall St set to open sharply lower as China retaliates with fresh tariffs

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Futures down: S&P 500 2.49%, Nasdaq 100 2.6%, Dow 2.6%

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March payrolls beat expectations

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Fed chair Jerome Powell's speech at 11:25 am ET

(Updates with prices before opening bell)

By Sruthi Shankar and Pranav Kashyap

April 4 (Reuters) -

U.S. stocks were set to open sharply lower on Friday, signaling another round of selloff on Wall Street, after China imposed fresh tariffs on all U.S. goods in response to the Trump administration's

sweeping levies

, escalating a global trade war.

China's finance ministry

said

it would impose additional tariffs of 34% on all U.S. goods from April 10 after U.S. President Donald Trump raised tariff barriers to their highest level in more than a century this week.

The tariffs have sent shockwaves through global financial markets, raising fears of a worldwide economic downturn and sharp price hikes across sectors in the world's biggest consumer market.

U.S.-listings of Chinese companies dived in premarket trading. JD.com dropped 9.1%, while Alibaba fell 8.3% and Baidu shed 7.6%.

At 8:47 a.m., futures tracking the tech-heavy Nasdaq 100 were down 485.5 points, or 2.6%. They have fallen 20% from their all-time highs hit in December, marking a bear market.

S&P 500 e-minis were down 137.5 points, or 2.49%, and Dow E-minis fell 1,069 points, or 2.62%.

The CBOE Volatility index, known as Wall Street's fear gauge, hit its highest level since August 2024 at 38.49 points.

"We're beginning to see the inevitable retaliation from the global trade partners of the United States. The risk is that this tips a recession scare into a full-blown recession," said Ben Laidler, head of equity strategy at Bradesco BBI.

Companies with exposure to China fell across the board, with mega-caps such as Apple ( AAPL ) falling 4.7%. Nvidia ( NVDA ) lost 3.4% and Amazon.com lost 6%.

The benchmark S&P 500 dropped 4.8% on Thursday, its largest one-day percentage decline since June 2020, after Trump imposed a 10% tariff on most imports into the United States and much higher levies on dozens of other countries.

The tech-heavy Nasdaq closed down 6% in the prior session, its biggest one-day drop since the height of the pandemic-fueled selloff in March 2020.

U.S. bank stocks dropped further on Friday, with the sector under pressure globally as investors anticipated more interest rate cuts from central banks and a hit to economic growth from tariffs.

Bank of America ( BAC ), JPMorgan Chase ( JPM ) and Citigroup ( C/PN ) all fell around 5% each. The yield on the benchmark 10-year Treasury notes was down to a six-month low of 3.936%.

A Labor Department report showed the U.S. economy added far more jobs than expected in March but Trump's sweeping import tariffs could test the labor market's resilience in the months ahead amid sagging business confidence.

Nonfarm payrolls increased by 228,000 jobs last month after a downwardly revised 117,000 rise in February. Economists had forecast payrolls advancing by 135,000 jobs.

Focus will also be on Fed Chair Jerome Powell's speech at 11:25 a.m. ET for clues on the path of interest rates.

Traders continued to anticipate a more accommodative policy from the U.S. central bank, with money market futures pricing in cumulative rate cuts of 110 basis points by the end of this year, compared with about 75 bps a week earlier.

"Looking at cross-asset reactions, the market is actually pricing in the real risk of a recession here," Laidler said.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta and Anil D'Silva)