Futures Dip Ahead of Inflation Data with Trump’s Tariff Threat in Focus

• US stock futures declined, with Dow Jones Industrial Average futures down 274 points (0.64%) to 42,634.00, S&P 500 futures off 32 points (0.52%) to 5,998.50, and Nasdaq 100 futures lower by 103 points (0.47%) to 21,782.75, as markets brace for May wholesale inflation data and escalating tariff threats from President Trump.
• Trump’s renewed “take it or leave it” tariff policy, with letters to trading partners expected within one to two weeks, alongside Middle East tensions, particularly between Israel and Iran, has heightened market uncertainty, pushing the VIX up 1.35 (7.82%) to 18.61 and gold prices up $59.90 (1.79%) to $3,402.10 per ounce.
• The Federal Reserve’s upcoming meeting and potential extension of the 90-day tariff pause, set to expire July 9, are pivotal, as investors weigh cooling inflation against trade risks, with crude oil down $1.26 (1.85%) to $66.89 a barrel and the 30-year Treasury yield slipping 0.032 (0.6478%) to 4.9080.

Investor sentiment weakened as U.S. stock futures fell on Thursday, with Dow Jones Industrial Average futures dropping 274 points (-0.64%) to 42,634.00, S&P 500 futures declining 32 points (-0.52%) to 5,998.50, and Nasdaq 100 futures slipping 103 points (-0.47%) to 21,782.75.

The pullback comes as markets brace for May wholesale inflation data, a key indicator of price pressures, following April’s consumer inflation report, which showed some easing despite President Trump’s “reciprocal” tariff hikes. The VIX, commonly referred to as Wall Street’s fear gauge, rose 1.35 points (+7.82%) to 18.61, signaling increased market uncertainty.

Meanwhile, Boeing’s (BA) shares dropped more than 7% in premarket trading after an Air India crash involving a 787-8 Dreamliner.

Trump’s renewed tariff threats have amplified market jitters, with the President reiterating plans to send letters to trading partners within one to two weeks, outlining “take it or leave it” unilateral tariff rates. Speaking at the John F. Kennedy Centre for the Performing Arts in Washington, Trump emphasized, “We’re going to be sending letters out in about a week and a half, two weeks, to countries, telling them what the deal is.” This follows his April announcement of elevated tariffs on multiple nations, which were paused for 90 days amid fears of a global economic downturn. While a tariff truce with China and a trade framework with the UK have been secured, negotiations with other partners remain unresolved. Treasury Secretary Scott Bessent, addressing Congress, suggested a “highly likely” extension of the 90-day tariff pause, set to expire July 9, offering a potential reprieve for markets.

Geopolitical tensions, particularly in the Middle East with Iran warning of retaliation if nuclear negotiations with the U.S. fail, have compounded concerns over Trump’s trade policies, which threaten to destabilize the fragile US-China detente. The S&P 500’s (SPX) recent halt to its winning streak underscores investor caution as they navigate these risks. Meanwhile, commodity markets displayed mixed signals: gold surged $59.90, or 1.79%, to $3,402.10 per ounce, signaling safe-haven demand, while crude oil fell $1.26, or 1.85%, to $66.89 a barrel, reflecting demand concerns. The 30-year Treasury yield edged down 0.032, or 0.6478%, to 4.9080, suggesting muted expectations for long-term growth or inflation.

The Federal Reserve looms large in investors’ minds as next week’s policy meeting approaches. Expectations for interest-rate cuts in 2025 have grown, fueled by signs of cooling inflation, but the Fed is likely to adopt a cautious stance, prioritizing incoming economic data. The May wholesale inflation report could provide further clarity on whether Trump’s tariffs are reigniting price pressures or if inflationary risks remain contained. A benign reading might complicate the Fed’s calculus, as it balances growth concerns against the need to maintain price stability.

Wall Street’s focus oscillates between Trump’s trade rhetoric and macroeconomic indicators, with the tariff saga injecting volatility into markets. The prospect of no-deal tariff hikes, should negotiations falter, raises the specter of supply chain disruptions and higher costs for US consumers and businesses. Yet, the pause extensions and ongoing talks signal a pragmatic approach to averting immediate escalation. As investors await clarity on both trade and inflation, the interplay of these forces will likely dictate market direction in the near term, with the Fed’s response serving as a critical anchor for expectations.

WallStreetPit does not provide investment advice. All rights reserved.

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