Wall Street opens mixed as Trump Fed clash simmers; long-term Treasury yields higher

Wall Street opens mixed as Trump Fed clash simmers; long-term Treasury yields higher

US stocks opened little changed on Tuesday as traders weighed escalating political pressure on the Federal Reserve against anticipation for Nvidia’s earnings, a bellwether for the artificial intelligence trade.

The S&P 500 slipped 0.1% at the open, while the Dow Jones Industrial Average fell 55 points, or 0.1%. The Nasdaq Composite was flat after outperforming in recent weeks.

Markets are still digesting President Donald Trump’s surprise move to dismiss Federal Reserve Governor Lisa Cook, an action Cook has vowed to contest. Legal challenges appear likely, but the episode has already rattled confidence in the Fed’s independence. Investors pushed long-term Treasury yields higher while short-dated notes eased, steepening the yield curve on expectations the central bank may cut rates in the near term but allow inflation risks to build later.

The dollar index weakened slightly, down about 0.3%, while gold ticked higher on safe-haven demand. Oil prices also fell more than 1%, with both WTI and Brent crude trading lower.

Attention is turning quickly toward Nvidia, which reports quarterly results after Wednesday’s close. The chipmaker’s stock extended gains in early trading after a volatile August that saw AI leaders in the “Magnificent Seven” lose ground before a late rebound. “Markets will likely move past the Cook news unless Powell himself comes under pressure,” said Adam Crisafulli of Vital Knowledge. “The near-term focus remains Nvidia, PCE inflation, and jobs.”

Trade tensions remain a secondary drag. Trump has threatened new tariffs on partners that maintain digital services taxes, while India faces a hike in U.S. tariffs to 50% starting Wednesday, escalating tensions after trade talks collapsed. Indian exporters, particularly in Surat’s diamond industry, are bracing for a sharp decline in U.S. orders, bringing the city’s cutting and polishing sector to a near-standstill.

In Europe, political uncertainty intensified as French assets tumbled with Prime Minister François Bayrou facing a no-confidence vote on September 8 that could topple his government, adding to the region’s risk premium. The French CAC 40 index dropped 0.7% at the open, reflecting investor caution, while Germany’s DAX remained relatively resilient, buoyed by hopes of lower U.S. borrowing costs. The European Central Bank’s upcoming communications later this week are under scrutiny as markets weigh inflation concerns against weakening growth. Separately, Norway’s centre-right opposition is campaigning to reduce or abolish wealth taxes ahead of the 2025 general election, a move that could influence tax policy debates across the continent.

In Asia, markets faced headwinds as indices closed in the red, driven by a fading yen support and caution over U.S. tech sector developments. South Korea’s Kospi index, despite earlier gains in May following Trump’s tariff postponement on the EU, slipped 0.4% amid concerns over weaker exports to the U.S., China, and ASEAN nations. China’s internet regulator has ordered tech giants like ByteDance, Alibaba, and Tencent to suspend purchases of Nvidia’s H20 AI chips, complicating the chipmaker’s efforts to offset lost revenue in the region. Meanwhile, Japanese police issued a rare public apology at the grave of a wrongfully accused man, highlighting efforts to address historical judicial errors.

Elsewhere, Botswana declared a national public health emergency, prompting global health organizations to monitor the situation closely. The UN chief’s remarks at Expo 2025 in Osaka emphasized the event as a platform for global storytelling, reflecting optimism amid regional challenges. These developments underscore a complex global landscape, with markets navigating political, economic, and social shifts.