US STOCKS-Tariff jitters hit Wall St futures; Tesla drops after Musk's political move

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Updates with prices, analyst comment

By Pranav Kashyap and Nikhil Sharma

July 7 (Reuters) - U.S. stock index futures slipped on Monday as murky U.S. tariff policies kept investors on edge, while Tesla shares took a hit after CEO Elon Musk announced his plans to launch a political party.

The White House is close to finalizing several trade pacts in coming days and will notify other countries of higher tariff rates by July 9, President Donald Trump said on Sunday, with the higher rates set to take effect on August 1.

Trump also threatened an extra 10% tariff on countries aligning themselves with the "Anti-American policies" of the BRICS group of Brazil, Russia, India, China and South Africa.

In April, Trump unveiled a base tariff rate of 10% on most countries and additional duties ranging up to 50%, subsequently pushing the Nasdaq .IXIC into a bear market.

Although he later delayed the effective date for all but 10% until July 9. The new date offers countries a three-week reprieve.

The market's reaction was cautious, as investors weighed the lack of fresh details and braced for light summer trading in a week light on economic data — except for Thursday's initial jobless claims.

At 7:05 a.m. ET, Dow E-minis YMcv1 were down 22 points, or 0.05%, S&P 500 E-minis EScv1 were down 18.25 points, or 0.29%, and Nasdaq 100 E-minis NQcv1 were down 100 points, or 0.43%.

Monday's pullback also comes after the S&P 500 .SPX and the Nasdaq .IXIC closed at record highs on Thursday following a surprisingly strong jobs report that pointed to resilience in the labor market.

The Dow .DJI closed the holiday-shortened week about 0.5% away from its record high.

Among megacap stocks, Tesla TSLA.O dropped 6.7% in premarket trading after Musk announced the formation of a U.S. political party, marking a new escalation in his feud with Trump.

"Although Tesla's AI future and the launch of its Robotaxi are seen as positive developments for Tesla, in the short term, Musk's political ambitions could be a major overhang for this stock," said Kathleen Brooks, research director at XTB.

Nvidia NVDA.O was on track to become the world's most valuable company in history, with the chipmaker's market capitalization nearing $4 trillion. Its shares were down 0.7% on the day.

Shares of WNS WNS.N jumped 14.3% after the French IT services firm Capgemini CAPP.PA agreed to buy the outsourcing firm for $3.3 billion in cash.

Meanwhile, Trump's chaotic tariff policies and what that might do to economic growth and inflation have kept the Federal Reserve from cutting interest rates, and minutes of its June meeting, scheduled for release on Wednesday should offer more clues on the interest rate outlook.

Traders have now priced out a July rate cut, with September odds at 66%, according to CME Group's FedWatch tool.

Attention is on the massive tax-cut and spending bill approved by Republicans in the House of Representatives after markets closed on Thursday. The bill is to add more than $3 trillion to the country's deficit over the next decade.

While the stimulus could juice economic growth, it also threatens to stoke inflation, making the Fed's next move harder to predict.

(Reporting by Pranav Kashyap and Nikhil Sharma in Bengaluru; Editing by Maju Samuel)

((pranav.kashyap@tr.com; +919886482111;))