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U.S. equity futures were mixed in early Tuesday trading, while the dollar rallied and Treasury bonds fell, as investors reacted to threats of significant tariffs on imported goods from President-elect Donald Trump that could upend markets heading into the final weeks of the year.
Updated at 7:28 AM EST
Two key U.S. retailers lowered their full-year profit forecasts Tuesday, suggesting the holiday shopping season could be muted by elevated inflation levels and broader consumer uncertainty.
Best Buy (BBY) , the electronics retailer which relies heavily on Apple purchases, said it sees same-store sales for the holiday period falling between 2.5% and 3.5% from 2023 levels.
Kohl’s (KSS) , meanwhile, posted a weaker-than-expected third quarter update, slashed its full-year sales forecast and ousted CEO Tom Kingsbury after less than two years at the helm of the upscale clothing and home goods retailer
Kohl’s shares were marked 15.9% lower in premarket trading at $15.50 each, a move that would extend their 2024 slide to around 50%. Best Buy shares, meanwhile, were marked 7% lower at $86.50 each.
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Trump’s late Monday message on his Truth Social social media network suggested he would impose additional tariffs of around 10% on China-made imports, while slapping a 25% levy on imports from both Canada and Mexico, both of which are signatories to the U.S.-Mexico-Canada Agreement trade agreement.
The tariff threats, which Trump linked to broader issues of drug importation and illegal immigration, look set to undo some of the market’s early-week optimism tied to the nomination of Wall Street veteran Scott Bessent as Treasury Secretary.
“As everyone is aware, thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before,” Trump said. “This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”
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The U.S. dollar index, which tracks the greenback against a basket of six major global currency peers, rose to 106.821 in overnight dealing, while both the Canadian dollar and the Mexican peso slumped lower.
The euro was also on the back foot, falling to 1.0516 against the dollar as investors worried the the Eurozone bloc would be the next target of Trump’s tariff ploy.
Benchmark 10-year Treasury note yields rose 2 basis points overnight to 4.301% while 2-year notes reversed some of yesterday’s advance, which followed a strong auction of $69 billion in new notes, to trade at 4.275%.
Related: Goldman Sachs analyst sees starting point for year-end S&P 500 rally
On Wall Street, stocks are set for a muted open, with futures contracts tied to the S&P 500 priced for a 6 point opening bell gain and those linked to the Dow Jones Industrial Average called 20 points higher.
The tech-focused Nasdaq, meanwhile, is priced for a 22 point opening bell gain.
Stocks on the move include Rivian Automotive (RIVN) , which jumped 7.2% in premarket following conditional approval for a $6.6 billion loan from the Department of Energy to build an EV production facility in Georgia.
Intel (INTC) shares were also higher, rising 2% to $25.34 each after securing $7.9 billion in grants and subsidies under the Chips Act to build new semiconductor facilities in Oregon, New Mexico and Arizona.
Eli Lilly (LLY) , meanwhile, jumped 2% to $770.00 each after President Joe Biden proposed rule changes to Medicare and Medicaid that would force the U.S. government to cover anti-obesity treatments such as the drugmaker’s Mounjaro.
The U.S.-listed shares of Novo Nordisk (NVO) , the Denmark-based maker of market leader Ozempic, was marked 1.7% higher in premarket.
In overseas markets, the Stoxx 600 index was marked 0.56% lower in mid-day Frankfurt trading, with auto stocks leading the decline amid concerns of new tariffs on U.S. imports, while Britain’s FTSE 100 fell 0.34% in London.
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Overnight in Asia, stocks in China were lower across the board, with the CSI 300 benchmark falling 0.21% and the Shanghai Composite down 0.12%, pulling the region-wide MSCI ex-Japan benchmark 0.55% lower into the close of trading.
Japan’s Nikkei 225, meanwhile, was marked 0.87% lower by the close of trading in Tokyo.
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