The S&P 500 Index ($SPX) (SPY) on Friday closed down -0.27%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.66%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.17%.  September E-mini S&P futures (ESU25) fell -0.33%, and September E-mini Nasdaq futures (NQU25) fell -0.21%. 

Stock indexes on Friday retreated on the escalation of trade tensions as President Trump ramped up his threats to impose higher tariffs, sparking a risk-off environment in asset markets.  Late Thursday, President Trump said a 35% tariff on some Canadian products would take effect on August 1, up from the current 25%.  The new Canadian tariffs would not apply to goods traded within the rules of the US-Mexico-Canada Trade Agreement, and a lower 10% tariff would be kept on some energy-related imports.  He also said he plans to impose blanket tariffs of 15% or 20% on most US trade partners. 

Stocks were also undercut by Friday’s +7 bp rise in the 10-year T-note yield.  T-note yields rose on concern that President Trump’s threats to impose higher tariffs on Canada and other US trading partners will lead to higher US inflation that could prevent the Fed from cutting interest rates.

The price of Bitcoin (^BTSUSD) on Friday rallied by more than +3% and posted a new record high.  Bitcoin has rallied more than +9% this week after the US House Committee on Financial Services announced on Tuesday that the week of July 14 will be “Crypto Week.” The US House Committee on Ways and Means has planned an oversight subcommittee hearing on July 16 entitled, “Making America the Crypto Capital of the World,” which may lead to more crypto-friendly regulations.

Stocks have been undercut as President Trump vowed to push forward with his aggressive tariff regime, stressing he would not offer additional extensions on country-specific tariffs set to take effect on August 1.  Earlier this week, Mr. Trump imposed a 50% tariff on copper imports that will include semi-finished goods, and said that drug companies could face tariffs as high as 200% on imports if they don’t relocate production to the US within the next year.  In addition, despite stating that the US was close to a trade deal with India, Mr. Trump said he would still impose a 10% tariff on India’s goods for their participation in BRICS, a group of developing nations he claimed were “set up to hurt” the US.   

Another hurdle for stocks is the upcoming earnings season, which begins in earnest next week.  Bloomberg Intelligence data show that the consensus for Q2 earnings of S&P 500 companies is for a rise of +2.8% year-over-year, the smallest increase in two years.  Also, only six of the eleven S&P 500 sectors are projected to post an increase in earnings, the fewest since Q1 of 2023, according to Yardeni Research.

Federal funds futures prices are discounting the chances at 7% for a -25 bp rate cut at the July 29-30 FOMC meeting.

Overseas stock markets Friday were mixed.   The Euro Stoxx 50 fell -1.01%.  China’s Shanghai Composite climbed to a 9-month high and closed up +0.01%.  Japan’s Nikkei Stock 225 fell to a 1-week low and closed down -0.19%.

Interest Rates

September 10-year T-notes (ZNU25) on Friday fell by -15 ticks.  The 10-year T-note yield rose by +7 bp to 4.419%.  T-note prices fell on President Trump’s threats to impose higher tariffs on Canada and other US trading partners, which fueled concern about higher US inflation that could prevent the Fed from cutting interest rates.  T-note prices were also undercut after the 10-year German bund yield rose to a 3.25-month high.

European government bond yields moved higher.  The 10-year German bund yield rose to a 3.25-month high of 2.734% and ended the day up +2.0 bp at 2.725%.  The 10-year UK gilt yield rose +2.6 bp to 4.622%.

UK May manufacturing production fell -1.0% m/m, weaker than expectations of -0.1% m/m and the biggest decline in 10 months.

ECB Executive Board member Isabel Schnabel said, “The bar for another ECB interest rate cut is very high, and there would only be a case for another rate cut if we saw signs of a material deviation of inflation from our target over the medium term. And at the moment, I see no signs of that.”

Swaps are discounting the chances at 1% for a -25 bp rate cut by the ECB at the July 24 policy meeting.

US Stock Movers

The Magnificent Seven stocks held up fairly well on Friday despite the losses in the main indexes, with only Apple (AAPL) and Meta Platforms (META) showing losses.  Alphabet (GOOG), Amazon (AMZN), and Tesla (TSLA) all closed up by more than +1%.

Nvidia (NVDA) rose +0.5% after CEO Huang met President Trump at the White House, ahead of Huang’s trip to China.

Some cryptocurrency stocks rallied as the price of Bitcoin (^BTCUSD) rose more than +3% to a new record high.  MicroStrategy (MSTR) rose more than +3% to lead gainers in the Nasdaq 100. 

Drone-related companies climbed after US Defense Secretary Pete Hegseth issued orders to ramp up production and deployment of drones.  Red Cat Holdings (RCAT) rallied more than +25%, Kratos Defense & Security Solutions (KTOS) rallied more than +11%, and AeroVironment (AVAV) rallied more than +10%.

Airline stocks on Friday moved lower, giving back some of Thursday’s sharp gains that were driven by positive guidance news from Delta.  American Airlines Group (AAL) fell more than -5%, United Airlines Holdings (UAL) fell more than -4%, and Alaska Air Group (ALK) fell more than -3%.  Delta Air Lines (DAL) fell -0.25% after Thursday’s surge of nearly +12%.

Capricor Therapeutics (CAPR) plunged -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. 

Civista Bancshares (CIVB) fell more than -13% after announcing the pricing of an underwritten public offering of 3.29 million shares of common stock at a price of $21.25 per share, below Thursday’s closing price of $24.82.

Oscar Health (OSCR) fell more than -7% after Wells Fargo Securities downgraded the stock to underweight from equal weight with a price target of $10.

Albemarle (ALB) fell more than -4% after UBS downgraded the stock to sell from neutral with a price target of $57.

Expeditors International of Washington (EXPD) fell nearly -3% after Bank of America Global Research downgraded the stock to underperform. 

Northern Trust Corp (NTRS) fell -0.6% after Keefe, Bruyette & Woods downgraded the stock to underperform from market perform with a price target of $120.

Levy Strauss & Co (LEVI) rose more than +11% after reporting Q2 net revenue of $1.45 billion, stronger than the consensus of $1.37 billion, and raising guidance on its full-year net revenue forecast to up +1% to +2% from a previous forecast of down -1% to -2%. 

Performance Food Group (PFGC) rose by more than +4% on reports that the company has attracted takeover interest from US Foods Holding Corp. 

Visteon Corp (VC) rose by more than +2% after Goldman Sachs upgraded the stock to buy from neutral with a price target of $120.   

Earnings Reports (7/14/2025)

Equity Bancshares Inc (EQBK), Fastenal Co (FAST), FB Financial Corp (FBK), Immersion Corp (IMMR), Kestra Medical Technologies Ltd (KMTS), Rezolve AI PLC (RZLV), Simulations Plus Inc (SLP).