Stocks Down as President Trump Increases Tariff Threats
U.S. stock indexes are trading lower as escalating tariff threats from President Trump create renewed headwinds across equity and bond markets. The S&P 500 Index is down -0.57%, the Dow Jones Industrial Average has slipped -0.65%, and the Nasdaq 100 Index is off -0.51%. September E-mini S&P futures are down -0.67%, while Nasdaq futures have fallen -0.57%.
Trump’s New Tariff Regime Sparks Inflation Fears and Stock Caution
Market sentiment shifted sharply after President Trump reaffirmed plans to implement a 35% tariff on select Canadian goods starting August 1, up from the current 25%. While some energy-related products will remain under a 10% tariff and USMCA-compliant goods are exempt, the move signals an aggressive trade posture. Trump further stated he intends to apply blanket tariffs of 15% to 20% across most U.S. trading partners.
Investors are responding with caution. The bond market is seeing a sell-off, with the 10-year T-note yield climbing +5 basis points to 4.40%. Traders are concerned that a broad-based tariff policy will reignite inflationary pressures, reducing the likelihood of Federal Reserve rate cuts. Fed funds futures now imply only a 7% chance of a 25 bp rate cut at the July FOMC meeting.
Crypto Surges While Tech Stumbles Amid Global Uncertainty
Bitcoin stands out as a rare winner, surging over +3% to a new record high. Crypto assets are rallying on optimism surrounding next week’s “Crypto Week” in the U.S. House of Representatives, which includes a July 16 hearing titled “Making America the Crypto Capital of the World.” Bitcoin is up more than +9% this week.
Meanwhile, earnings season presents another concern. S&P 500 Q2 earnings are expected to rise just +2.8% year-over-year, the smallest gain in two years. Only six of the eleven sectors are forecast to show growth, according to Yardeni Research.
Individual stock moves were notable. Semiconductor names like Intel, AMD, and Marvell are under pressure, with losses exceeding 1%. Capricor Therapeutics plunged over -40% after the FDA declined approval for its DMD heart therapy. Civista Bancshares dropped more than -10% after pricing a share offering below market value.
Drone Stocks Take Flight as Defense Department Boosts Procurement
Conversely, drone-related stocks surged on reports of increased Pentagon production orders. Red Cat Holdings soared over +21%, with AeroVironment and Kratos up more than +7%. Bitcoin-related firms like MicroStrategy and Riot also gained on crypto momentum.
Levi Strauss jumped more than +7% on a strong Q2 earnings beat and raised guidance. Performance Food Group rose +4% on takeover speculation. Medtronic gained following a government proposal favorable to its hypertension treatment. Visteon added over +1% after a bullish Goldman Sachs upgrade.
Overseas markets were mixed. Europe’s Euro Stoxx 50 declined by 0.91%, while China’s Shanghai Composite eked out a small gain, and Japan’s Nikkei fell by 0.19%. In bond markets, the German 10-year bund yield rose to a 3.25-month high of 2.734%. U.K. yields also climbed after disappointing manufacturing data.
Markets will closely monitor trade developments, Fed rate expectations, and next week’s earnings season kickoff for further direction.
