Wall Street Set for Lower Open as Tariff Tensions Weigh, Tesla Shares Drop
Wall Street prepared for a weaker open on Monday as investors remained cautious amid tariff uncertainty, while Tesla shares slid after CEO Elon Musk announced plans to launch a political party.
Tariff Uncertainty Keeps Markets Cautious
President Donald Trump said on Sunday that the White House is close to finalising several trade agreements and will notify countries of higher tariff rates by 9 July, with the new rates taking effect on 1 August. Trump also threatened an additional 10% tariff on countries aligning with the “Anti-American policies” of the BRICS group.
In April, Trump announced a 10% base tariff on most countries and additional duties of up to 50%, pushing the Nasdaq into a bear market. Although the effective date was delayed for most rates, the 9 July deadline now offers a brief reprieve.
“There are increasing suggestions that August 1 might be the new July 9,” Deutsche Bank analysts noted.
Markets were subdued as investors anticipated a quiet trading week, with limited economic data except for Thursday’s initial jobless claims report.
Tesla Shares Slide, Nvidia Nears Milestone
At 8:34 a.m. ET, Dow E-minis were little changed, while S&P 500 E-minis fell 0.21% and Nasdaq 100 E-minis declined 0.35%.
The pullback followed the S&P 500 and Nasdaq closing at record highs on Thursday after strong jobs data signalled resilience in the labour market.
“The market is in a risk-off environment, and you can certainly blame tariff uncertainty,” said Elias Haddad, senior markets strategist at Brown Brothers Harriman. “However, US data hasn’t been terrible, which supports stocks.”
Tesla shares dropped 6% in premarket trading after Musk announced the creation of a US political party, escalating tensions with Trump.
Nvidia was down 1% but remained on track to become the world’s most valuable company, with its market capitalisation nearing $4 trillion.
Meanwhile, shares of WNS jumped 14.3% after Capgemini agreed to acquire the outsourcing firm for $3.3 billion in cash.
Fed Rate Outlook and Spending Bill in Focus
Trump’s tariff policies and their potential impact on growth and inflation have complicated the Federal Reserve’s interest rate outlook. Minutes from the Fed’s June meeting, due Wednesday, will offer further insight.
Traders have now priced out a July rate cut, with a 66% chance of a September cut, according to CME Group’s FedWatch tool.
Attention also remains on a tax-cut and spending bill passed by House Republicans last Thursday, which is projected to add over $3 trillion to the US deficit over the next decade. While the stimulus could boost growth, it may also fuel inflation, making the Fed’s path forward less clear.
with inputs from Reuters