U.S. stock markets showed a notable decline on Friday following President Donald Trump's introduction of new tariffs on Canada. This occurred after a day of gains for the market.
Market Reaction to Tariffs
On Friday, stock indices saw significant declines: the Dow Jones fell by 297 points, or 0.7%, the S&P dropped 0.3%, and the Nasdaq decreased by 0.2%. Trump posted on Truth Social that if Canada 'works with him to stop the flow of fentanyl,' tariffs could be reconsidered. In an interview with NBC, he confirmed plans for blanket tariffs of 15% to 20% on other untargeted countries.
Investors Watch Europe
On Thursday, stocks showed a gain: the S&P 500 increased by 0.3%, and the Nasdaq added 0.1%. However, the Friday decline led to a 1% loss for the Dow over the week. Investors are awaiting further news regarding tariffs on the European Union, with no confirmed statements yet.
State of Bond Market and Volatility
The bond market is showing concerning signals: the 10-year Treasury yield has climbed back above 4.40%. Meanwhile, Jerome Powell is stepping down as Federal Reserve Chair, adding another layer of uncertainty. Volatility measures are also dropping, with the S&P 500’s volatility at its lowest level since February 2025.
The current shifts in stock and bond markets highlight growing uncertainty in economic policy and investor reactions to new trade measures. Upcoming earnings and inflation reports may further alter market dynamics.
