Futures dip after record run as investors focus on Trump's tax bill
The S&P 500 and the Nasdaq Composite notched all-time closing highs on Monday, capping their best quarter in over a year as hopes for more trade deals and possible rate cuts supported sentiment.
U.S. senators were still voting on Tuesday on a potentially long list of amendments to Trump's bill that is expected to bring a $3.3 trillion hit to the nation's debt pile.
The Republican majority's struggle to pass the bill exemplifies deep divisions within the party over debt. The bill aims to partly cover the cost of the tax reductions with cuts to Medicaid and some food assistance programs for low-income Americans.
Meanwhile, Trump expressed frustration with U.S.-Japan trade negotiations and Treasury Secretary Scott Bessent warned that countries could be notified of sharply higher tariffs as a July 9 deadline approaches despite good-faith negotiations.
Tesla's shares dropped 4.1% premarket after a fresh spat between CEO Elon Musk and Trump over the tax bill, with the president urging the government efficiency department to review the subsidies that Musk's companies have received.
Tesla also reported a sales drop for a sixth straight month in Sweden and Denmark in June.
"There's a clear mismatch between how markets are positioned and the risks that remain on the table," Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said in a note.
"Trade tensions, geopolitical uncertainty, the ballooning U.S. debt burden, the possibility that the Fed might not be able to cut rates, signs of economic slowdown, and even a potential re-acceleration in inflation — none of these risks have disappeared."
At 06:52 a.m. ET (1052 GMT), S&P 500 E-minis were down 13.75 points, or 0.22%, Nasdaq 100 E-minis were down 61 points, or 0.27%, and Dow E-minis were down 56 points, or 0.13%.
The S&P 500 and Nasdaq's rise to record highs marked a stunning recovery in sentiment that was hammered by Trump's chaotic trade policies and geopolitical tensions, with investors betting on AI enthusiasm and earnings momentum to keep the bull run going.
The blue-chip Dow on Monday closed 2.2% below its all-time high touched in December.
S&P Global and ISM's June manufacturing activity surveys, May job openings data as well as Fed Chair Jerome Powell's comments at a European Central Bank forum later in the day will be parsed for hints on U.S. monetary policy outlook.
Soft economic data in recent weeks and expectations of Trump picking a dovish central bank head have supported bets of interest rate cuts from the Fed this year and next.
Ahead of Thursday's crucial payrolls data, money markets were pricing in 68 basis points of rate cuts by the end of 2025 and about 135 bps of cuts by October next year, per LSEG data.
Among other stocks, stablecoin firm Circle edged up 1.1% on news it was applying to create a national trust bank in the U.S.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Devika Syamnath)
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