Investing.com– U.S. stock index futures fell slightly on Monday evening as uncertainty over President Donald Trump’s trade tariffs and potential interest rate cuts kept traders to the sidelines.
Trading volumes were also thin on account of the labor day holiday.
Futures fell after a negative session on Wall Street on Friday, after sticky PCE price index data sparked some doubts over just how much impetus the Fed has to cut rates.
Uncertainty over Trump’s tariffs grew over the weekend after a U.S. appeals court ruled that most of the levies were illegal, with the president now likely to challenge the ruling in the Supreme Court.
S&P 500 Futures fell 0.1% to 6,467.0 points, while Nasdaq 100 Futures fell 0.1% to 23,437.25 points by 19:23 ET (23:23 GMT). Dow Jones Futures fell 0.1% to 45,559.0 points.
The U.S. Court of Appeals for the Federal Circuit ruled late last week that most of Trump’s tariffs are illegal, and that only Congress held the authority to pass the levies.
Trump chided the appeals court decision, and said he will appeal the ruling with the Supreme Court.
While a supreme court ruling against the tariffs stands to lower the prospect of tariff-related economic disruptions, such a move also heralds heightened uncertainty over recent trade agreements between the U.S. and its partners, which will likely need to be renegotiated.
Trump’s tariffs took effect from August, with countries facing levies between 10% to as high as 50%. But a bulk of the tariffs are expected to be borne by local importers, which could underpin U.S. inflation in the coming months.
Uncertainty over U.S. interest rates also remained a point of contention for Wall Street, as sticky PCE price index inflation data for July raised some doubts over future rate cuts by the Fed.
Wall Street indexes had fallen sharply on Friday following the PCE data, which is the Fed’s preferred inflation gauge. The print showed inflation increased mildly in July as expected, pointing to further stalling in a deflationary trend seen earlier in the year.
Sticky inflation gives the Fed less impetus to cut interest rates. While Fed Chair Jerome Powell had in August signaled that the bank was considering a September rate cut amid some cooling in the labor market, he still flagged risks from sticky inflation.
Markets were still pricing in a 86.6% chance the Fed will cut rates by 25 basis points in September, CME Fedwatch showed. A slew of Fed officials are also set to speak this week.
