April 9 (Reuters) - Wall Street's main indexes were set to open sharply lower on Wednesday after China announced more levies on U.S. goods, retaliating to President Donald Trump's reciprocal tariffs that took effect earlier in the day.
The world's second largest economy would impose additional tariffs of 84% on all U.S. goods from April 10, up from the 34% previously announced, China's finance ministry said.
As hopes of concessions faded and tariffs on dozens of countries began, recession fears gripped the financial markets and investors ramped up their exit from stocks, industrial commodities and even government bonds.
The upcoming U.S. earnings season will offer more insights about the health of corporate America.
"The longer this trade dispute goes on and the more it escalates with one side adding to what the other side is doing, that will continue to erode investor and consumer confidence," said Sam Stovall, chief investment strategist at CFRA Research.
At 08:25 a.m. ET, Dow E-minis were down 923 points, or 2.44%, S&P 500 E-minis were down 107.5 points, or 2.14% and Nasdaq 100 E-minis were down 316 points, or 1.83%.
The CBOE Volatility index (.VIX), - seen as Wall Street's 'fear gauge' - gained for the fifth straight session, hovering near its highest since August last year at 57.47 points.
The S&P 500 (.SPX), had in the previous session posted its steepest four-day decline since the pandemic-induced selloff in 2020.
The benchmark index is headed toward a bear market, which gets confirmed when it ends down 20% from its record closing high. As of last close, it was down 19% from its peak.
At current levels, the S&P 500 is set to open more than 80 points lower, slipping below that threshold.
Most megacap and growth stocks turned lower after rising initially in premarket trading, with Apple (AAPL.O), opens new tab,
Amazon.com (AMZN.O), and Meta Platforms (META.O), down close to 2% each.
Oil prices fell to their lowest levels since February 2021, dragging top players Exxon Mobil (XOM.N), and Chevron (CVX.N), down over 2% each. SLB (SLB.N), was off 4.8%.
Meanwhile, government bond yields rose and prices dropped as rising fears of a U.S. recession boosted expectations of interest-rate cuts by the Federal Reserve.
The yield on the 10-year note resumed its uptrend to hover near its highest since late February, last at 4.47%.
Traders see more than 100 basis points of easing by the December, implying four fully priced-in 25-basis-points cuts, according to LSEG data.
Minutes from the Fed's March policy meeting are due later in the day, while a consumer price inflation reading is set for Thursday, which could offer more clues on the inflation trajectory.
U.S.-listed shares of Chinese firms also shed a bulk of their premarket gains after China announced retaliatory tariffs. The iShares MSCI China ETF (MCHI.O), was last up 2.1%.
Shares of U.S. drugmakers slid after Trump reiterated plans for "major" tariffs on pharmaceutical imports. Eli Lilly (LLY.N), fell 3.9% and AbbVie (ABBV.N), 5.3%.
Reporting by Shashwat Chauhan and Purvi Agarwal in Bengaluru; Editing by Arun Koyyur
