Futures muted as investors weigh Trump's tariff threats

(Reuters) - U.S. stock index futures were flat on Tuesday, as investors paused following several sessions of gains and weighed the implications Donald Trump's tariffs on top trade partners could have on the local economy.

The president-elect said he would impose a 25% conditional tariff on Canadian and Mexican imports that could violate a free-trade deal he negotiated during his previous term. He also outlined "an additional 10% tariff, above any additional tariffs" on imports from China.

At 5:10 a.m. ET, Dow E-minis were up 1 point, or were flat, S&P 500 E-minis were up 0.75 points, or 0.01% and Nasdaq 100 E-minis were up 10 points, or 0.05%.

Automakers such as Ford (NYSE:F ) and General Motors (NYSE:GM ) -that have highly integrated supply chains across Mexico, the U.S. and Canada - lost 1.5% and 2.2%, respectively in premarket trading.

"New tariffs from the U.S. could intensify the global trade frictions and may impact the economic growth prospects in the longer term," strategists at ING bank said.

Yields on Treasury bonds that had slipped in the previous session following Scott Bessent's selection as incoming Treasury secretary, rose and pressured riskier equities.

The benchmark S&P 500 touched a record high on Monday and logged its sixth-straight session of gains and a drop in yields lifted rate-sensitive sectors such as real estate and regional banks.

Investors also rotated into small-cap companies, that helped the Russell 2000 index scale an all-time high on Monday, surpassing the previous record hit three years ago. On Tuesday, futures tracking the Russell dropped 0.5%.

On the data front, the Conference Board's survey on consumer confidence is due at 10:00 a.m. ET and post-noon markets will assess minutes from the central bank's meet earlier this month. However, top on the radar this week is the personal consumption expenditure report due on Wednesday.

Minneapolis Federal Reserve President Neel Kashkari, typically on the hawkish end of the U.S. central bank's policy spectrum, said he is open to cutting interest rates again next month.

Analysts say Trump's trade and fiscal policies, though seen as a positive for companies and economic growth, could stoke inflation pressures and slowdown the Fed's monetary policy easing cycle.

Traders have recently swayed in placing their bets on the central bank's move in December. The probability for a 25-basis point interest rate cut currently stands at 55.9%, As per the CME Group's (NASDAQ:CME ) FedWatch Tool.

Among others, Zoom Video Communications (NASDAQ:ZM ) lost 7%%. The company raised its forecast for fiscal 2025 revenue and adjusted profit.



Poseida Therapeutics' shares more than tripled in value after Switzerland's Roche said it will acquire the cell therapy maker in a cash deal worth up to $1.5 billion.

Investors also monitored talks of a ceasefire between Israel and Lebanon, while tensions remained high between Ukraine and Russia. Oil prices, the most sensitive to geopolitical tensions in the two regions, edged higher after Monday's drop.

Source: Investing.com