U.S. stock markets mostly traded lower Friday afternoon, pulling back from record highs, as new tariff threats from the Trump administration against Canada shook investor confidence.
The S&P 500 dipped by 0.3%, just a day after reaching a new all-time high. The benchmark index is on pace to record its first weekly loss in three weeks. The Dow Jones Industrial Average fell 272 points, or 0.6%, as of 2:11 p.m. Eastern, also heading for a weekly decline. In contrast, the Nasdaq Composite inched up by less than 0.1% after an early drop. The tech-heavy index had notched a record high on Thursday.
Bond yields climbed, with the yield on the 10-year Treasury rising to 4.42%, up from 4.34% the day before.
President Donald Trump escalated trade tensions with a letter to Canadian Prime Minister Mark Carney on Thursday, announcing a steep increase in tariffs on Canadian imports—from the current 25% to 35%. The decision deepens the divide between two longtime North American allies.
This latest move is part of the administration’s ongoing strategy to pressure foreign governments into renegotiating trade deals by threatening high tariffs—even against traditional partners like Canada. While an initial deadline was set for Wednesday, only two deals have been announced so far, with the U.K. and Vietnam. The negotiation window has now been extended to August 1.
Trump also floated the possibility of imposing 200% tariffs on pharmaceutical imports and raising copper tariffs to 50%, bringing them in line with those on steel and aluminum.
Markets have remained relatively calm in recent weeks despite earlier volatility caused by tariff rollouts in the spring. Stocks have steadily climbed to record levels, suggesting investors may have adjusted to the administration’s unpredictable trade stance. However, some analysts remain cautious.
“The market’s reaction to the latest tariff threats has been surprisingly muted. Investors may be assuming Trump will eventually back down,” said Paul Ashworth, Chief North America Economist at Capital Economics. “We’re not so sure.”
As trade worries persist, investor focus is beginning to shift to quarterly corporate earnings, which are expected to influence market direction in the coming weeks.
On Friday, shares of Levi Strauss surged 11.4% after the company beat sales and profit expectations and raised its full-year forecast, even while acknowledging increased costs from tariffs. PriceSmart climbed 5.9% after reporting strong third-quarter results and revealing plans to expand into Chile.
Earnings season ramps up next week with major banks like JPMorgan Chase, Wells Fargo, and Citigroup set to report on Tuesday. Analysts expect S&P 500 companies to post 5% earnings growth for the second quarter, which would be the weakest pace since Q4 of 2023, according to FactSet.
The financial and health care sectors were Friday’s biggest drags. Visa slipped 2.3%, while Gilead Sciences dropped 3.5%.
Some Big Tech names gained, including Nvidia, which rose 1.2%.
Airline stocks declined after a brief rally spurred by Delta Air Lines’ upbeat quarterly report. Delta slipped 1%, United Airlines fell 3.5%, and American Airlines lost 4.1%.
T-Mobile shares edged down 0.5% after the Justice Department said it wouldn’t block the company’s proposed $4.4 billion acquisition of U.S. Cellular, which had faced antitrust scrutiny. U.S. Cellular shares climbed 3.6%.
Red Cat Holdings saw its stock soar 24.7% after Defense Secretary Pete Hegseth ordered expanded drone production and deployment.
In overseas markets, European indexes traded broadly lower following a mostly downbeat session in Asia.
Meanwhile, Bitcoin surged to another record high, briefly topping $118,000 before settling near $117,653, according to Coindesk. The rally comes amid strong momentum across risk assets and follows Nvidia’s leap to a $4 trillion valuation. It also precedes “Crypto Week” in the U.S. Congress on July 14, where lawmakers are expected to debate key cryptocurrency regulation bills.
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