U.S. Stocks May Lack Direction As Traders Digest Trump’s Tariff Threats

Stocks may turn in a lackluster performance in early trading on Tuesday after trending higher over the past several sessions. The major index futures are currently pointing to a mixed open, 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.

Not long after the start of trading, the Conference Board is due to release its report on consumer confidence in the month of November. The consumer confidence index is expected to climb to 112.3 in November after jumping to 108.7 in October.

The Commerce Department is also scheduled to release its report on new home sales in the month of October. New home sales are expected to pull back to an annual rate of 730,000 in October after surging to a rate of 738,000 in September.

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.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan’s Nikkei 225 Index slumped by 0.9 percent, while China’s Shanghai Composite Index edged down by 0.1 percent.

The major European markets have also moved to the downside on the day. While the U.K.’s FTSE 100 Index is down by 0.2 percent, the French CAC 40 Index and the German DAX Index are both down by 0.3 percent.

In commodities trading, crude oil futures are climbing $0.53 to $69.47 a barrel after plunging $2.30 to $68.94 a barrel on Monday. Meanwhile, after plummeting $93.70 to $2,618.50 an ounce in the previous session, gold futures are rising $14.80 to $2,633.30 an ounce.

On the currency front, the U.S. dollar is trading at 153.29 yen compared to the 154.23 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0508 compared to yesterday’s $1.0495.

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