Concerns About Fed Independence, Tariffs May Weigh On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a slightly lower open on Tuesday, with stocks likely to add to the losses posted in the previous session.

Concerns about the Federal Reserve's independence may weigh on Wall Street after President Donald Trump said he is removing Fed Governor Lisa Cook from her position.

In a letter to Cook posted on Truth Social, Trump accused her of making false statements on one or more mortgage agreements.

However, Cook responded with a statement claiming Trump does not have the authority to fire her and said she will not resign.

"I will continue to carry out my duties to help the American economy as I have been doing since 2022," said Cook.

Negative sentiment may also be generated in reaction to Trump's latest tariff threats, with the president threatening to impose "substantial additional tariffs" on countries that do not remove digital taxes and related regulations that harm U.S. tech companies.

"America, and American Technology Companies, are neither the 'piggy bank' nor the 'doormat' of the World any longer," Trump said on Truth Social. "Show respect to America and our amazing Tech Companies or, consider the consequences!"

On Monday, Trump threatened to impose 200 percent tariffs on China if Beijing does not export rare-earth magnets to the U.S.

After ending last Friday's trading sharply higher, stocks moved mostly lower over the course of the trading day on Monday. The major averages turned in a lackluster performance for much of the session before coming under pressure going into the close.

The major averages all finished the day in negative territory. The Dow slid 349.27 points or 0.8 percent to 45,282.47, the S&P 500 fell 27.59 points or 0.4 percent to 6,439.32 and the Nasdaq slipped 47.24 points or 0.2 percent to 21,449.29.

The weakness on Wall Street partly reflected profit taking, as some traders looked to cash in on the strong gains posted last Friday, which lifted the Dow to a new record closing high.

The rally seen during last Friday's session came as remarks from Federal Reserve Chair Jerome Powell seemed to indicate the central bank is likely to lower interest rates next month.

Selling pressure was relatively subdued for most of the day, however, as traders seemed reluctant to make more significant ahead of several key events later this week.

Traders are likely to keep a close eye on earnings news from Nvidia (NVDA), with the AI darling and market leader due to report its second quarter results after the close of trading on Wednesday.

The latest U.S. economic data is also likely to attract attention, as the Commerce Department is due to release a report on Friday that includes the Fed's preferred readings on consumer price inflation.

Reaction to reports on durable goods orders, consumer confidence and second quarter GDP may also impact trading in the coming days.

On the U.S. economic front, the Commerce Department released a repot this morning showing new home sales in the U.S. decreased from an upwardly revised level in the month of July.

The Commerce Department said new home sales fell by 0.6 percent to an annual rate of 652,000 in July after surging by 4.1 percent to an upwardly revised rate of 656,000 in June.

Economists had expected new home sales to climb by 0.5 percent to an annual rate of 630,000 from the 627,000 originally reported for the previous month.

Biotechnology stocks showed a significant move to the downside over the course of the session, with the NYSE Arca Biotechnology Index slumping by 2.2 percent after ending last Friday's trading at a nearly six-month closing high.

Considerable weakness also emerged among transportation stocks, as reflected by the 1.8 percent loss posted by the Dow Jones Transportation average.

Pharmaceutical, healthcare and utilities stocks also came under pressure as the day progressed, while oil producer stocks saw some strength amid a sharp increase by the price of crude oil.

Commodity, Currency Markets

Crude oil futures are tumbling $1.08 to $63.72 a barrel after jumping $1.14 to $64.80 a barrel on Monday. Meanwhile, after edging down $1 to $3,417.50 an ounce in the previous session, gold futures are rising $6.70 to $3,424.20 an ounce.

On the currency front, the U.S. dollar is trading at 147.49 yen compared to the 147.80 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is trading at $1.1648 compared to yesterday's $1.1618.

Asia

Asian stocks fell on Tuesday as Fed independence concerns resurfaced and investors awaited Nvidia results amid hopes it can soothe fears about AI spending.

Trade tensions also kept investors on edge, with U.S. President Donald Trump threatening 200 percent tariffs on China if Beijing does not export rare-earth magnets to the U.S.

In the Oval Office on Monday, Trump spoke of Washington's strength in its standoff with Beijing and warned that if he played the "incredible cards" at his disposal, it would "destroy China."

"We are going to have a great relationship with China... They have some cards. We have incredible cards, but I don't want to play those cards. If I play those cards, that will destroy China. I am not going to play those cards," he said.

China's Shanghai Composite Index dipped 0.4 percent to 3,868.38, after hitting a 10-year high the previous day driven by liquidity.

Hong Kong's Hang Seng Index tumbled 1.2 percent to 25,524.92, snapping a two-day rally amid Trump's tariff threats.

Japanese markets fell sharply, while the yen gained ground on Fed independence fears after Trump took the unprecedented action of removing Federal Reserve Governor Lisa Cook following allegations that she falsified mortgage documents.

The Nikkei 225 Index closed 1.0 percent lower at 42,394.40, snapping a two-session winning streak and hitting its lowest close since August 8.

The broader Topix Index slumped 1.1 percent to 3,071.99. Toyota Motor gave up 1.4 percent and Honda Motor fell 1.7 percent.

Nissan Motor plunged 6.3 percent after it fell out of the world's top 10 automakers by sales for the first time, according to Nikkei Asia.

Seoul stocks snapped a three-day winning streak after Trump said a 15 percent tariff on imports from South Korea would remain unchanged. The Kospi fell 1.0 percent to 3,179.36.

Korean Air Lines lost 4.1 percent after it announced plans to order more than 100 Boeing jets. Shipbuilder Hanwha Ocean slumped 6.2 percent and HD Hyundai Heavy Industries declined 3.8 percent.

Australian markets ended lower as the minutes of RBA's August monetary policy meeting showed that the pace of future easing is likely to hinge on economic data.

The benchmark S&P/ASX 200 Index dropped 0.4 percent to 8,935.60, with miners pacing the decliners. The broader All Ordinaries Index settled 0.4 percent lower at 9,207.30.

Iron ore major Fortescue tumbled 3.9 percent after reporting a 41 percent decrease in annual net profit. On the contrary, grocer Coles surged 8.5 percent after flagging sustained strength in sales at its core supermarkets.

Across the Tasman, New Zealand's benchmark S&P/NZX 50 Index slid 0.9 percent to 12,957.98, giving back gains from the previous session as Trump claimed the United States holds overwhelming leverage over China in their trade dispute.

Europe

European shares have moved moslty lower on Tuesday, with Fed independence fears and French political risks keeping investors on edge.

U.S. President Donald Trump took the unprecedented action of removing Federal Reserve Governor Lisa Cook, raising concerns over the Federal Reserve's independence.

French bonds tumbled as Prime Minister Francois Bayrou called a confidence vote for September 8 over his plans for sweeping budget cuts.

Officials from France's main opposition parties said they would not back the government, raising the risk of French political instability.

In economic news, U.K. shop price inflation accelerated to the highest since early last year in August due to higher food prices, the British Retail Consortium reported.

Shop price inflation rose to 0.9 percent in August from 0.7 percent in July. This was the highest since March last year. The increase was driven by the annual rise in food inflation to 4.2 percent from 4.0 percent in July.

While the French CAC 40 Index is down by 1.3 percent, the U.K.'s FTSE 100 Index is down by 0.4 percent and the German DAX Index is down by 0.3 percent.

Bunzl has jumped as the British distribution firm announced the completion of two new acquisitions in Spain and Mexico.

Halma has also moved to the upside after it acquired Netherlands-based advanced gyroscopic locating systems provider Brownline in a deal worth around £129 million.

Swiss healthcare giant Novartis is also moving higher after collaborating with Swedish biopharmaceutical company BioArctic to develop new treatments for serious neurological diseases.

Meanwhile, British American Tobacco has declined as Chief Financial Officer Soraya Benchikh stepped down with immediate effect after about 15 months in the role.

U.S. Economic News

Reflecting a continued plunge by orders for transportation equipment, the Commerce Department released a report on Tuesday showing a steep drop by new orders for U.S. manufactured durable goods in the month of July.

The Commerce Department said durable goods orders slumped by 2.8 percent in July after plummeting by a revised 9.4 percent in June.

The decrease was not as big as anticipated, however, as economists had expected durable goods orders to tumble by 4.0 percent compared to the 9.3 percent nosedive originally reported for the previous month.

Excluding the sharp drop in orders for transportation equipment, durable goods orders jumped by 1.1 percent in July after rising by 0.3 percent in June. Economists had expected ex-transportation orders to inch up by 0.1 percent.

At 9 am ET, Standard & Poor's is scheduled to release its report on home prices in major metropolitan areas in the month of June. The annual rate of home price growth is expected to slow to 2.6 percent in June from 2.8 percent in May.

The Conference Board is due to release its report on consumer confidence in the month of August at 10 am ET. The consumer confidence index is expected to dip to 96.4 in August after rising to 97.2 in July.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month's auction of $69 billion worth of two-year notes.