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Stock futures fell early Monday as the market reacted to more tariff threats from President Donald Trump–this time targeting the European Union and Mexico.
Trump said that 30% levies on imports on two of the U.S.’s largest trading partners would go into effect on August 1, in letters released Saturday.
Futures on the Dow Jones Industrial Average fell 133 points, or 0.3% in premarket trading, while S&P 500 futures and Nasdaq 100 futures were also down 0.3%. All three main indexes fell Friday after Trump threatened 35% tariffs on Canada.
Once again, trade developments are catching the attention of investors to start the week. While the Aug. 1 deadline for deals to be reached with U.S. gives time for negotiations to play out, the market may be starting to fear that tariff rates will end up being significantly higher than previously expected.
European Commission President Ursula von der Leyen said the bloc will continue to work toward an agreement with the U.S., adding that a 30% tariff would “hurt businesses, consumers, and patients on both sides of the Atlantic.” She added that the EU stood ready with countermeasures if an agreement can’t be reached.
Trade fears may quickly take a backseat to earnings season, though, which gets under way in earnest when several big banks report results Tuesday. JPMorgan, Wells Fargo, Citigroup, and BlackRock are all expected to release earnings before the open tomorrow.
“The big question for markets in the coming weeks is if earnings, which are expected to be solid, can overshadow the tariff issues that are still there in the background,” Glen Smith, CIO of GDS Wealth Management said. “So far, the market has been able to withstand tariff headlines and is more focused on earnings and economic resiliency,” he added.
Economic data will also keep investors busy this week, particularly the latest inflation reading Tuesday. Economists expect the consumer prices index to rise 2.9% on an annual basis in June, up from 2.8% in May.
The yield on the 10-Year Treasury note edged higher to 4.426% early Monday, while the U.S. Dollar Index rose 0.1% to 97.96.
