The major U.S. index futures are currently pointing to a mixed open on Tuesday, as the Dow futures are down by 0.3 percent but the S&P 500 futures are up by 0.3 percent.
Traders may be reluctant to make significant moves as they digest President-elect Donald Trump’s latest threats to impose increased tariffs on Mexico, Canada and China.
In a post on his social media platform Truth Social, Trump said he would impose a 25 percent tariff on all products from Mexico and Canada on his first day in office, blaming the countries for the influx of illegal immigrants and illicit drugs into the U.S.
“This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” Trump said.
Trump said in a subsequent post that he would also impose an additional 10 percent tariff on Chinese products, claiming the country has not done enough to stop the “massive amounts of drugs, in particular Fentanyl, being sent into the United States.”
The President-elect’s threats may offset the optimism generated in reaction to news he intends to nominate Scott Bessent as Treasury Secretary. Bessent has previously called for Trump’s planned tariff increases to be implemented gradually.
Traders will also be looking ahead to the release of the minutes of the Federal Reserve’s latest monetary policy meeting later this afternoon.
The minutes of the November meeting, when the Fed decided to lower interest rates by 25 basis points, could shed light on the outlook for rates.
CME Group’s FedWatch Tool is currently indicating a 59.6 chance the Fed will lower rates by another 25 basis points next month but a 40.4 percent chance the central bank will leave rates unchanged.
After showing a strong move to the upside early in the session, stocks gave back some ground over the course of the trading day on Monday but managed to close mostly higher. While the major averages pulled back off their best levels of the day, the Dow still reached a new record closing high.
The Dow closed higher for the fourth consecutive session, jumping 440.06 points or 1.0 percent to 44,736.57. The S&P 500 extended its winning streak to six sessions, climbing 18.03 points or 0.3 percent to 5,987.37, while the Nasdaq rose 51.18 points or 0.3 percent to 19,054.84.
Stocks added to the strong gains posted last week amid a positive reaction to news President-elect Donald Trump intends to nominate billionaire hedge fund manager Scott Bessent as Treasury Secretary.
Bessent is seen as supportive of the equity markets and an advocate for deficit reduction. He has also called for Trump’s planned tariff increases to be implemented gradually, which could reduce the impact on inflation.
“Hedge fund manager Scott Bessent is perceived as being a relatively conventional and safe pair of hands candidate,” said AJ Bell investment director Russ Mould. “Importantly, Bessent is seen as being less aggressive on tariffs than some of the rhetoric espoused by Trump on the campaign trail.”
He added, “A fall in bond yields in response to his unveiling suggests some of the concern about a new wave of inflationary pressures from import tariffs has eased and that Bessent might be able to do something to bring the U.S. deficit under control.”
However, buying interest waned as the day progressed, as traders seemed reluctant to make more significant moves ahead of the release of several key economic reports in the coming days.
A report on personal income and spending in the month of October is likely to be in the spotlight, as it includes the Federal Reserve’s preferred inflation readings.
Housing stocks moved sharply higher amid a steep drop by treasury yields, resulting in a 4.5 percent spike by the Philadelphia Housing Sector Index.
Substantial strength was also visible among computer hardware stocks, with the NYSE Arca Computer Hardware Index soaring by 4.1 percent to a four-month closing high.
Airline stocks also showed a significant move to the upside on the day, driving the NYSE Arca Airline Index up by 2.6 percent.
Commercial real estate, retail and biotechnology stocks also saw considerable strength, while gold stocks plunged along with the price of the precious metal.
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