NEWS

U.S. stock index futures dipped modestly on Tuesday, as Wall Street took a breather after record-setting sessions. Investors adopted a cautious stance amid shifting expectations for monetary policy, renewed geopolitical friction, and a crucial week of labor market data.

Major Indexes Pull Back Slightly
As of 1:00 PM Riyadh time, Dow Jones futures were down 28 points (0.1%), while S&P 500 futures slipped 12 points (0.2%). Nasdaq 100 futures dropped 52 points, or 0.2%.

This comes after a strong start to the week, where both the S&P 500 and Nasdaq hit fresh all-time highs, fueled by renewed hopes of interest rate cuts and signs of easing trade disputes.

Trade Outlook: Fragmented Deals Over Grand Strategies
Markets remain on edge as the U.S. scrambles to finalize limited trade agreements before a July 9 deadline that could trigger aggressive tariff escalations.

Following a tentative agreement with China and Canada’s withdrawal of a planned digital services tax, optimism rose about possible breakthroughs. However, negotiations with Japan have proven difficult. According to the Financial Times, the Trump administration is now focusing on smaller, issue-specific deals to avoid reimposing tariffs of up to 50%.

These targeted pacts mark a significant shift from Trump’s earlier pledge to secure 90 comprehensive trade deals in a 90-day freeze on tariff actions.

Monetary Policy: Trump Intensifies Attacks on Powell
Expectations for a Fed rate cut in September have surged past 90%, according to futures markets, following weaker-than-expected inflation data last week. But President Trump is clearly not satisfied.

On Monday, Trump sharply criticized Fed Chair Jerome Powell, accusing him of being “too slow as usual” and demanding substantial interest rate reductions. In a handwritten note attached to a global interest rate comparison, Trump argued that “hundreds of billions” are being lost due to the Fed’s reluctance to act more aggressively.

He also hinted at possibly nominating a shadow replacement for Powell later this year—an unprecedented move that could undermine the central bank’s independence, analysts warn.

Jobs Data in the Spotlight
The market’s next major test comes Thursday with the release of the U.S. nonfarm payrolls report. Any surprises in hiring, wage growth, or unemployment could significantly impact expectations for monetary easing.

Senate Pushes Forward on Massive Tax Bill
Republicans narrowly passed a procedural vote (51-49) to begin debate on President Trump’s sweeping tax and spending reform package. The bill combines major tax cuts with domestic spending changes and a new border security framework.

According to the Congressional Budget Office, the Senate version could add $3.3 trillion to the federal deficit over the next decade. It also proposes raising the debt ceiling by $5 trillion—$1 trillion more than the House version—raising fears of a default risk if the bill stalls during the summer.

Tesla Shares Slide Amid Trump-Musk Feud
Tesla (NASDAQ: TSLA) stock fell sharply in premarket trading after President Trump escalated his feud with CEO Elon Musk. Trump accused Musk of benefiting “more than anyone in history” from federal subsidies and called for an immediate review of government support for Tesla.

In a post on Truth Social, Trump warned that without subsidies, “Elon might have to shut down and return to South Africa.”

The clash intensified after Musk voiced opposition to Trump’s tax bill, which is currently under debate in the Senate.

Oil Prices Hit Three-Week Low as Supply Concerns Ease
Crude prices slipped to their lowest levels since mid-June, with Brent futures down 0.2% to $66.60 per barrel and WTI crude falling to $64.97.

Traders are pricing in a potential production boost from OPEC+ in its July 6 meeting. Reuters reported last week that the cartel may increase output by 411,000 barrels per day in August, following similar hikes in May, June, and July—bringing total additions to 1.78 million barrels per day for the year.