U.S. Stocks May Come Under Pressure On Threat Of New Tariffs
(RTTNews) - After ending the previous session modestly higher, stocks are likely move back to the downside in early trading on Friday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 266 points.
Trade concerns are likely to weigh on the markets once again after President Donald Trump revealed plans to use tariffs to compel Mexico to make efforts to stop flow of illegal immigrants across the country and into the U.S.
"On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP," Trump announced in a post on Twitter
He added, "The Tariff will gradually increase until the Illegal Immigration problem is remedied, at which time the Tariffs will be removed."
Trump revealed in a subsequent White House statement the tariffs will be raised to 10 percent on July 1st if the crisis persists, with tariffs eventually rising as high as 25 percent by October 1st.
The president argued the sustained imposition of tariffs will produce a massive return of jobs back to U.S., describing the move as an effort to "firmly and forcefully" stand up for America's interests.
"We have confidence that Mexico can and will act swiftly to help the United States stop this long-term, dangerous, and deeply unfair problem," Trump said.
"The United States has been very good to Mexico for many years," he added. "We are now asking that Mexico immediately do its fair share to stop the use of its territory as a conduit for illegal immigration into our country."
The threat of new tariffs on Mexican imports comes amid the escalating trade dispute between the U.S. and China, which has recently weighed on stocks and raised concerns about the global economic outlook.
In economic news, the Commerce Department released a report showing personal income in the U.S. rose by more than expected in the month of April.
The Commerce Department said personal income climbed by 0.5 percent in April after inching up by 0.1 percent in March. Economists had expected personal income to rise by 0.3 percent.
The report also said personal spending increased by 0.3 percent in April after spiking by an upwardly revised 1.1 percent in March.
Personal spending had been expected to edge up by 0.2 percent compared to the 0.9 percent jump originally reported for the previous month.
Just after the start of trading, MNI Indicators is scheduled to release its report on Chicago-area business activity in the month of May.
The Chicago business barometer is expected to rise to 53.7 in May from 52.6 in April, with a reading above 50 indicating growth.
The University of Michigan is also due to release its revised reading on consumer sentiment in May. The consumer sentiment index for May is expected to be downwardly revised to 101.5 from the preliminary reading of 102.4.
After failing to sustain an early move to the upside, stocks fluctuated over the course of the trading session on Thursday. The major averages spent a good part of the day bouncing back and forth across the unchanged line.
Eventually, the major averages closed in positive territory but well off their best levels of the day. The Dow rose 43.47 points or 0.2 percent to 25,169.88, the Nasdaq climbed 20.41 points or 0.3 percent to 7,567.72 and the S&P 500 edged up 5.84 points or 0.2 percent to 2,788.86.
In overseas trading, stocks across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index tumbled by 1.6 percent, while China's Shanghai Composite Index slumped by 1 percent.
The major European markets have also moved to the downside on the day. While the German DAX Index has plunged by 1.9 percent, the French CAC 40 Index is down by 1.5 percent and the U.K.'s FTSE 100 Index is down by 1.1 percent.
In commodities trading, crude oil futures are tumbling $1.19 to $55.40 a barrel after plummeting $2.22 to $56.59 a barrel on Thursday. Meanwhile, after climbing $6.10 to $1,292.40 an ounce in the previous session, gold futures are jumping $9.40 to $1,301.80 an ounce.
On the currency front, the U.S. dollar is trading at 108.87 yen versus the 109.62 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1152 compared to yesterday's $1.1129.