US stocks drop to end week in red on Trump's tough tariff talk. Bitcoin rallies to record
U.S. stocks closed lower after President Donald Trump put tariffs back into the forefront by slapping Canada with a 35% tariff, starting Aug. 1 and warning the levy could rise if Canada retaliates.
Goods complying with the U.S.-Mexico-Canada Agreement would still be exempt for now, a White House official said.
Canada is the U.S.'s second largest trading partner. It recently rescinded a digital services tax to get Trump back to the negotiating table over trade issues.
Trump also told NBC News he is eyeing blanket tariffs of 15% to 20% on most trading partners, although exact levels are still being determined. The current blanket tariff rate is 10%.
Separately, the European Union said it's nearly finished drawing an outline trade deal with the U.S. and is waiting to hear from the Trump administration. Trump had threatened to send a letter to the EU with tariff rates.
The blue-chip Dow declined 0.63%, or 279.13 points, to 44,371.51; the broad S&P 500 dropped 0.33%, or 20.71 points, to 6,259.75; and the tech-laden Nasdaq slipped 0.22%, or 45.14 points, to 20,585.53. The losses dragged all the major indexes into the red for the week despite the Nasdaq and S&P 500 reaching all-time highs earlier in the week.
The benchmark 10-year yield rose to 4.417%.
The new tariff developments come after stocks shrugged off a 50% tariff on copper imports, effective Aug. 1, and a 50% tariff on Brazil.
Instead, investors focused on positive corporate news, including better-than-expected results and outlook from Delta Air Lines. Its annual earnings outlook had been pulled in April due to tariff uncertainty but was reinstated as bookings stabilized. Delta's annual earnings per share guidance was lower than its forecast in January but higher than Wall Street's estimates, helping allay some fears about recent tariff chaos. The Nasdaq and S&P 500 closed at record highs.
"Going into second-quarter earnings season, stocks could get an added boost from low expectations," said Kristy Akullian, head of iShares investment strategy, Americas, at BlackRock. "Analyst forecasts have steadily fallen since the first-quarter in the face of policy uncertainty, meaning that consensus expectations of 3% year-over-year earnings growth for the S&P 500 could be a low bar compared to the 13% growth delivered in the first quarter."
Levi's and PetSmart also released positive quarterly results earlier.
In the afternoon, Treasury unexpectedly reported a budget surplus in June due to tariff revenues. June's surplus was just more than $27 billion, compared with a $316 billion deficit in May.
Customs duties totaled about $27 billion in June, up from $23 billion in May and a 301% gain from June 2024.
The government last posted a June surplus in 2017, during Trump’s first term.
Bitcoin record high, again
Bitcoin climbed to $118,780 to notch a record high for the third straight day.
The cryptocurrency has gained momentum as more companies adopt a bitcoin treasury strategy and bitcoin ETFs become more popular.
Congress is slated to kick off "Crypto Week" on July 14, which may be making investors more bullish, too.
Bitcoin was last up 1.81% at $117,988.80.
Fed's Powell under pressure, again
Trump's administration continued its attack on Federal Reserve Chair Jerome Powell.
This time, Office of Management and Budget Director Russell Vought said Powell “has grossly mismanaged the Fed” and suggested he had misled Congress about a pricey and “ostentatious” renovation of the central bank’s headquarters. He is vowing a probe into this.
Vought's comments are just the latest attack on Powell. For months, Trump has berated the Fed chief to try to get him to lower interest rates and has even floated the idea of naming Powell's replacement early. Powell's term is up in May 2026.
Late in the day, Fannie Mae and Freddie Mac Chairman Bill Pulte said he would welcome Powell's resignation. He said he was making the statement in response to reports saying Powell was considering resigning, but no reports could be found suggesting that.
Corporate news
- Jeans maker Levi Strauss topped expectations with its second-quarter results and raised its full-year outlook above analysts' forecasts. It said it has been working to absorb additional tariff costs rather than pass them on to consumers. Shares rose 11.04%.
- PriceSmart's quarterly results topped analysts' estimates. Shares added almost 5.33%.
- BP warned of an up to $1.5 billion in after-tax impairment charge. It also said lower oil and gas prices will weigh on its results. Shares rose about 3.5%.
(This story was updated with new information.)
Medora Lee is a money, markets, and personal finance reporter at Paste BN. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.