Nasdaq, S&P 500 Futures Freeze As Fresh Trump Tariff Threats On Mexico, India Collide With Fed Jitters — Strategist Warns Santa Rally Looks Unlikely

The muted action reflects a broader sense of indecision across markets, with traders weighing the central bank’s interest-rate path against the latest geopolitical and trade uncertainties.

• The S&P 500 is only trading within a 100-point range from its all-time highs.
• Retail traders have bearish retail positioning on SPY and QQQ amid skepticism over Nvidia’s chip-export approval to China.
• Siegel expects a flat December performance but sees potential for healthy consolidation and rotation into smaller, rate-sensitive stocks.

U.S. stock futures traded narrowly mixed early Tuesday, underscoring the indecision among traders as they await the Federal Reserve’s final rate decision for the year. Risk sentiment could also take a beating from President Donald Trump’s renewed tariff salvo fired at North American neighbors, Mexico and Canada, as well as India.

Writing on Truth Social, Trump berated Mexico for violating the Water Treaty and issued an ultimatum: if Mexico does not release the agreed-upon water quota, a 5% tariff will be imposed. Separately, while speaking at a White House event, the president said he was mulling fresh tariffs on agricultural products such as Indian rice and Canadian fertilizer, Bloomberg reported.

Traders may also sift through a couple of economic data points and some key earnings reports as they plot their next moves.

WisdomTree Senior Economist Jeremy Siegel calls for a relatively flat performance in December as the markets digest the Fed’s message and wait for clarity on tariffs and policy heading into 2026. In his weekly commentary, the economist and strategist said, “The one seasonal I do give more weight to is the short window between Christmas and New Year’s, the so-called Santa Claus rally.”

The strategist said the consolidation he predicts would be healthy "if it comes with a subtle rotation — away from over-owned megacaps and toward smaller, rate-sensitive names that benefit most from the first leg of easing.”

How Futures Are Trading

As of 2:40 a.m. ET on Tuesday, the Nasdaq 100 futures, S&P 500, and Dow futures were marginally higher, while the Russell 2000 futures traded down 0.08%.

On Stocktwits, retail sentiment toward the SPDR S&P 500 ETF (SPY), an exchange-traded fund that tracks the S&P 500 Index, and the Invesco QQQ Trust (QQQ) ETF, which tracks the Nasdaq 100 Index, remained ‘bearish’ as of early Tuesday. The message volume on the SPY and QQQ ETF streams remained at ‘normal’ and ‘high’ levels, respectively.

Most observers did not view the Trump administration’s decision to allow the export of Nvidia’s H200 chips to China favorably, as they doubted China's uptake.

Another user stated that a Santa Claus rally, which gives the market a year-end lift, is unlikely this year.

How Markets Fared Monday

Stocks were in a “wait-and-watch” mode on Monday amid uncertainty surrounding the Fed decision, due Wednesday. All but the IT sector closed in the red, with communication services, consumer discretionary, material, healthcare, and utility stocks ending markedly lower. In the process, the S&P 500 Index moved away from its all-time high of 6,920.34 before settling at 6,846.51.

The QQQ, SPY, and SPDR Dow Jones Industrial Average ETF Trust (DIA) fell 0.19%, 0.32% and 0.39%, respectively, while the iShares Russell 2000 ETF (IWM) closed marginally higher.

Key Catalysts To Watch Out For

The National Federation of Independent Business (NFIB) is scheduled to release its optimism index for November at 6 a.m. ET. The index, which measures optimism among small businesses, is expected to remain unchanged at 98.2.

The Bureau of Labor Statistics is set to release the results of the Job Openings and Labor Turnover (JOLTS) survey for October at 10 a.m. ET. The reading will be closely watched, as the government suspended the release of the September report due to the shutdown.

Notable names reporting earnings on Tuesday are AutoZone (AZO), G-III Apparel (GIII), Sailpoint (SAIL), AeroVironment (AVAV), Casey’s General (CASY), Cracker Barrel (CBRL), and GameStop (GME). 

How Other Markets Fared

The Asian markets fell across the board as the Fed decision loomed, while Japanese stocks closed modestly higher, supported by the yen's weakness. In a major central bank decision from the region, the Reserve Bank of Australia announced a pause, in line with expectations, and hinted that further easing is unlikely.

The greenback was weaker against most major currencies, except the yen. The 10-year U.S. Treasury note yield was little changed early Tuesday after rising 3.3 points to 4.172% in the previous session. Among commodities, crude oil futures fell modestly, with the WTI crude now trading below $59 level, and gold futures also eased.

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