The initial rollout of Trump’s tariff policies in the spring roiled financial markets. But Wall Street has been relatively stable in recent weeks, with stocks steadily rising to record levels That suggests the market has mostly adjusted to the unpredictability of Trump’s rapidly shifting tariffs. Some market watchers, however, aren’t so sure.
The market’s response to Trump’s tariff escalation this week “has been surprisingly muted. Markets appear to believe that Trump will again back down,” Paul Ashworth, chief North America economist at Capital Economics, wrote Friday. “We are not so sure.”
Despite the uncertainty around tariffs, Wall Street has already come to accept a “base case” of 10 per cent tariffs across the board, said Eric Teal, chief investment officer at Comerica Wealth Management.
“To the extent that this gets extended, I think the market has priced a lot of that in,” he said.
Trade policy aside, the market is now set to shift at least some of its focus on companies due to report quarterly earnings over the next few weeks.
On Friday, Levi Strauss jumped 11.3 per cent after the jeans maker easily beat Wall Street’s sales and profit targets and raised its full-year forecast, despite expecting higher costs from tariffs.
PriceSmart climbed 5.3 per cent a day after the warehouse club operator delivered solid third-quarter results and said it’s looking into expanding into Chile.
Earnings season shifts into high gear next week with JPMorgan Chase, Wells Fargo and Citigroup among the big banks due to report their results on Tuesday.
Shares in financial and health care sector companies were the biggest weights on the market Friday.
Visa fell 2.2 per cent and Gilead Sciences dropped 4.3 per cent.
Several airline stocks lost ground a day after encouraging quarterly results from Delta Air Lines set off a rally in the sector. Delta slipped 0.2 per cent, United fell 4.3 per cent and American gave up 5.6 per cent.
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Elsewhere in the market, shares of T-Mobile closed 0.2 per cent lower after the Justice Department announced Thursday that it would not prevent the company from closing on its proposed $US4.4 billion ($6.7 billion) acquisition of US Cellular. That deal, announced more than a year ago, had come under antitrust scrutiny from the Justice Department under President Joe Biden’s administration.
US Cellular shares rose 3.6 per cent.
Shares in aviation company Red Cat Holdings jumped 26.4 per cent after Defense Secretary Pete Hegseth issued orders aimed at ramping up production and deployment of drones.
All told, the S&P 500 fell 20.71 points to 6,259.75. The Dow dropped 279.13 points to 44,371.51, and the Nasdaq slipped 45.14 points to 20,585.53.
Bond yields rose. The yield on the 10-year Treasury rose to 4.42 per cent, from 4.34 per cent late Thursday.
European stock indexes closed broadly lower following a mostly lower finish in Asian markets.
Meanwhile, bitcoin climbed to another all-time high Friday, briefly eclipsing $US118,000 before easing back to around $US117,901, according to Coindesk.
Bitcoin’s price jump came amid bullish momentum across risk assets and coincides with Nvidia’s surge to a $US4 trillion valuation. It also comes days before the US Congress’ Crypto Week on July 14, where lawmakers will debate a series of bills that could define the regulatory framework for the industry.
