U.S. equity markets dialled down from their record highs on Friday, leading key stock indices to conclude the week in negative territory. The S&P 500 index slipped 0.3%, a day after marking an all-time high. This downturn occurred following fortnightly consecutive gains, turning the week’s outcome into a net loss. The Dow Jones Industrial Average recorded a 0.6% drop while the Nasdaq composite index conceded 0.2%, fluctuating throughout the day between minor gains and losses.
Thursday had seen Nasdaq—known for its tech-centered focus—punch through to a fresh high. Investors had waded through a disunited week, with one eye on the ongoing rollout of new tariff threats instigated by the Trump administration against trade allies such as Canada. The focus also turned to anticipate the upcoming corporate earning reports.
President Donald Trump boosted tensions between the U.S. and longtime ally Canada by announcing via a letter a 35% tax increase on assorted Canadian goods, underscoring the rising discord. This is another in a series of actions by the White House intending to utilize tariff hikes on imports from around the world as leverage to negotiate new trade agreements—even with traditionally close trade partners such as Canada.
The Trump administration had initially projected Wednesday as a cutoff date for nations to strike deals with the U.S., failing which they would be subject to significantly increased tariffs. With a mere two trade agreements relayed since April—with the United Kingdom and Vietnam, respectively—the negotiation window has now been extended to 1st August.
One potential proposal from Trump suggested a dramatic increase in tariffs of up to 200% on pharmaceutical drugs. It also proposed a 50% tariff spike on copper imports, aligning copper with the current rates applicable to steel and aluminum imports.
Amidst the haze of tariff-related uncertainties, Wall Street seems to have made peace with an underlying assumption of 10% tariffs being a universal expectation, according to Eric Teal, Chief Investment Officer at Comerica Wealth Management. ‘In view of these extensions, it is my belief that the market has already factored much of this in,’ he asserts.
In the context of sector-specific performance during Friday’s market activity, the financial and healthcare sectors emerged as the primary culprits dragging the market down. Visa’s stocks plummeted by 2.2% while Gilead Sciences experienced a 4.3% drop.
A handful of airline stocks faltered, despite Delta Air Lines posting optimistic quarterly results which sparked a spree of buying in the sector the previous day. Delta shares lost ground by 0.2%, United Airlines saw a 4.3% drop, whereas American Airlines’s stock price declined by 5.6%.
In other industry news, T-Mobile’s share concluded 0.2% lower after the Department of Justice declared its non-interference in the company’s proposed acquisition of U.S. Cellular worth $4.4 billion. This acquisition plan, publicized over a year ago, had been under the scrutiny of antitrust investigations from the Department of Justice during President Biden’s administration.
Thus, instead of impeding the ongoing deal, the Justice Department’s non-interference led to a rise in U.S. Cellular’s stock by 3.6%. The market also observed a surge in Red Cat Holdings’ shares, which jumped 26.4% after an order from Defense Secretary Pete Hegseth to boost drone production and deployment.
With the dust settling after varying market movements, the S&P 500 index concluded the day down by 20.71 points, settling at a value of 6,259.75. The Dow Jones index also saw a 279.13 point decrease resulting in a final value of 44,371.51. The Nasdaq composite ended its trading day losing 45.14 points to settle at 20,585.53.
In light of changes in other financial instruments, bond yields registered an uptick. The yield of the 10-year Treasury bond rose from the previous day’s 4.34% to finalize at 4.42% on Friday.
Market trends in Europe and Asia noticeably had a ripple effect extending across U.S. stock markets. European stock indices were mostly on the decline at the close of their markets, following a similar trend seen in most Asian exchanges earlier.