Financial markets saw a mixed response on Friday morning, with Wall Street experiencing a slight upward movement. Futures for the S&P 500 and Nasdaq edged up by 0.1% before the bell, while the Dow Jones Industrial Average showed a gain of 0.2%.
A key driver of market activity was the announcement of new tariff plans by President Trump. He declared on social media that tariffs, including 100% import taxes on pharmaceutical drugs, would be implemented starting the following week. Furthermore, Trump indicated that foreign furniture and cabinetry manufacturers were “flooding” the United States, necessitating tariffs “for National Security and other reasons.” Reacting to this news, shares of home furnishing companies experienced a downturn, with Wayfair, Williams-Sonoma, and RH all registering losses.
The President also expressed concern regarding foreign-made heavy trucks and parts impacting domestic producers. However, a significant portion of such trucks are either manufactured within the U.S. or are U.S. brands produced in Canada or Mexico. Conversely, shares of U.S. truck manufacturer Paccar saw an increase.
In other news impacting market sentiment, shares of Boeing Co., a Dow component, rose substantially following a report indicating that federal safety regulators would relax their oversight of the plane manufacturer. Simultaneously, the U.S. was scheduled to release its latest consumer spending data on Friday, which includes the Federal Reserve’s preferred measure of inflation. This comes amid a backdrop of economic reports suggesting a stronger U.S. economy than previously anticipated, which could influence the Federal Reserve’s decisions regarding future interest rate cuts.
The Federal Reserve had previously implemented its first interest rate cut of the year the prior week and had signaled further cuts through the end of the next year, a move crucial for the stock market’s performance since April. Easier rates can boost the economy and make investors more willing to pay high prices for stocks and other investments. The Fed will consider Friday’s inflation data, along with various reports on the labor market, when making its next interest rate decision.
European markets showed positive momentum in midday trading, with Germany’s DAX, France’s CAC-40, and Britain’s FTSE 100 all seeing gains. The implications of the new U.S. tariffs, particularly whether they would be added to existing duties or if trade deals like the EU would provide exemptions, remained uncertain. Stephen Innes of SPI Asset Management highlighted the potential for these tariffs to negatively impact investor psychology, especially given the stretched valuations in the market.
Asian markets largely closed in the red. Japan’s Nikkei 225 experienced a significant decline. Sumitomo Pharma Co.’s shares and Chugai Pharmaceutical also suffered losses. Government data revealed that inflation in the Tokyo area rose, though it remained below expectations, leading to speculation about a potential rate hike. South Korea’s Kospi and Chinese markets, including Hong Kong’s Hang Seng index and the Shanghai Composite index, also saw significant drops. Australia’s S&P/ASX 200 rose slightly, while India’s BSE Sensex and Taiwan’s Taiex experienced losses.