US STOCKS-Wall St set to fall at open as Trump warns tariffs on Mexico

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* Trump threatens tariffs on Mexico in surprise tweet
* China menaces corporate hit-list of 'unreliable' foreign
firms
* Trade-sensitive Boeing drops; U.S. automakers tumble
* U.S. Treasury yield curve inversion deepens
* Data shows U.S. inflation picks up in April
* Futures fall: Dow 0.99%, S&P 1.03%, Nasdaq 1.22%

(Updates prices, adds comments)
By Shreyashi Sanyal
May 31 (Reuters) - U.S. stock indexes were set to tumble at
open on Friday, hit by fears that President Donald Trump's shock
threat of tariffs on Mexico could prove the trigger that pushes
the world's largest economy into recession.
The United States will impose a 5% tariff on all goods
coming from Mexico starting on June 10 until illegal immigration
is stopped, Trump said in a tweet late on Thursday. Mexican
President Andres Manuel Lopez Obrador said he would respond with
"great prudence".
That shocked global financial markets on Friday and futures
pointed to falls of 1 percent or more for all of Wall Street's
major indexes, with carmakers and manufacturers bearing the
brunt of the damage.
"It is a very sticky situation," said Art Hogan, chief
market strategist at National Securities in New York.
"American companies needed to find supply chains outside of
China when it looked like the (U.S.-China) trade deal is going
to take much longer and one of those countries that was pointed
to outside the pacific was Mexico."
Wall Street is on course for an almost 6% fall in May, its
worst performance this year and the trigger for a flood of money
into the bond market that has encouraged expectations of a U.S.
recession.
Adding to risks was Beijing's warning on Friday that it
would unveil an unprecedented hit-list of "unreliable" foreign
firms in retaliation for U.S. tariffs. U.S. Treasury yields fell to new multi-month lows, while the
yield curve, as measured in the gap between three-month
US3MT=RR and 10-year bond yields US10YT=RR , remained heavily
inverted. An inversion in the yield curve is seen by some as an
indicator that a recession is likely in one to two years. US/
U.S. automakers were the worst hit from Trump's announcement
as they have long built vehicles in Mexico, taking advantage of
the country's cheap labor, trade deals and proximity to the
United States.
Shares of General Motors Co GM.N slid 4.7%, while those of
Ford Motor Co F.N fell 3.4%.
Tariff-sensitive industrial bellwether Boeing Co BA.N
dropped 1.1% and Caterpillar Inc CAT.N declined 1.3%.
FAANG stocks - Facebook Inc FB.O , Apple Inc AAPL.O ,
Alphabet Inc GOOGL.O , Netflix Inc NFLX.O and Amazon.com Inc
AMZN.O - were also down between 1% and 1.5%.
At 8:52 a.m. ET, Dow e-minis 1YMc1 were down 249 points,
or 0.99%. S&P 500 e-minis ESc1 were down 28.75 points, or
1.03% and Nasdaq 100 e-minis NQc1 were down 88.25 points, or
1.22%.
Data showed U.S. consumer prices increased in April, which
could support the Federal Reserve's contention that recent low
inflation readings were transitory and allow the central bank to
keep interest rates unchanged for a while. Commerce Department said its core personal consumption
expenditures (PCE), the Fed's preferred inflation measure that
excludes volatile food and energy components, gained 0.2% last
month after edging up 0.1% in March.
Among other stocks, Gap Inc GPS.N tumbled 14.3% after the
apparel retailer cut its 2019 profit forecast. Constellation Brands STZ.N , which has substantial brewery
operations in Mexico, slid 7.1%.