US equities closed lower on Friday, as President Donald Trump intensified his trade strategy, threatening a 35% tariff on some Canadian goods and floating the possibility of increasing levies on most other countries.
The S&P 500 Index fell 0.3%, with nine of the eleven sectors in red, and declines led by financials and health care. The benchmark also ended the week down 0.3% after being bombarded by a continuous stream of tariff news.
The Nasdaq 100 fell 0.2% Friday, and the Dow Jones Industrial Average retreated 0.6%.
Among individual stocks, Capricor Therapeutics sank 33% after the FDA declined to approve the company’s treatment candidate aimed at treating a disease of the heart muscle associated with Duchenne muscular dystrophy. Levi Strauss shares jumped 11% after the maker of 501 jeans boosted its net revenue forecast for the full year. Cryptocurrency-exposed stocks climbed after Bitcoin rallied past $118,000 for the first time.
Trump said the tariff level on Canada would take effect from Aug. 1. The announced rate is an increase from the current 25% tariff that’s imposed on US imports from Canada that aren’t shipped under the terms of the US-Mexico-Canada Agreement.
S&P 500 Stumbles After a String of Records
Index closed at fresh all-time high on Thursday
Trade tensions returned to the markets in full-force this week, as investors were whiplashed by continuous back and forth on the tariff deadline, and threats of raising the rate of the levies on several trade partners. Despite that, US equities have climbed from record to record over the past couple weeks, betting on the resilience of American companies and hopes that the Federal Reserve will eventually start lowering interest rates.
“Markets have been impressively resilient this week in the face of potentially dramatic tariff escalation, but if negative trade headlines continue throughout the day, don’t be surprised if this early selloff accelerates because tariff rates are possibly going much, much higher than previously expected,” said Tom Essaye of the Sevens Report.
Meanwhile, stocks near all-time highs are also starting to show some signs of overheating. According to data compiled by Thrasher Analytics, trading volume for stocks that are falling has accounted for just 42% of total turnover on US exchanges over the past month, on average. That’s the least since 2020, and can mean that sellers are growing scarce in the US stock market.
To Andrew Thrasher, the firm’s co-founder, the phenomenon is a signal that investors may have grown overly exuberant during the market’s blistering rebound.
Investors will soon turn their focus to corporate results. The six biggest US banks are scheduled to disclose second-quarter results next week, with analysts predicting trading-revenue increases for all of them, data compiled by Bloomberg shows.
“While bulls and bears may debate the rally’s sustainability, the recent steadying of earnings estimates suggests that the second-quarter earnings season could serve as the ultimate factor in determining whether the rally can extend its gains or transition into a more protracted, choppy consolidation phase,” said Mark Hackett, chief market strategist at Nationwide.
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