Stocks Drop into the Weekend, More Tariff Threats – Dow down 0.6%
US stocks dipped on Friday as investors weighed upcoming earnings reports and tariff threats, more of which came over the weekend. The Dow led the way lower, closing down 0.63%; the S&P lost 0.33%, and the Nasdaq fell 0.22%. The dollar pushed higher against the majors, with the DXY up 0.22% to 97.87 alongside Treasury yields, the 2-year adding 1.3 basis points to move up to 3.885%, and the benchmark 10-year jumping 6 basis points to close at 4.409%. Oil prices surged as the International Energy Agency advised that the market was tighter than many thought, and President Trump announced that he will make a major statement on Russia on Monday. Brent rose 2.51% to $70.36, and WTI climbed 2.82% to $68.45 a barrel. Gold also pushed higher on tariff concerns, up 0.95% to $3,354.54 an ounce.
Trump Holding All the Cards for Markets Today
In line with much of what we have been seeing in financial markets over the last six months, President Trump and his administration will have a major say in which way markets move in the next few sessions. Given the lack of scheduled events today and updates over the weekend, unless something else non-US related happens on the geopolitical front, today’s moves will come down to what we hear from the US on Russia and any other potential trade updates. It does feel like this could be a pivotal day and week in how markets react to Trump’s tariff threats. Investors have been calling his bluff over the last few months, with TACO (Trump Always Chickens Out) entering into market terminology. If we do see more ‘wiggle room’ given to trade partners through the announcement on Russia today or with updates on the weekend’s 30% tariffs on the EU and Mexico, then markets will take it as a green light to drive higher to fresh record levels. However, if we see the US crack down and impose tougher trade conditions, then we could see a substantial correction in the market that some investors have been fearing.
Quiet Calendar, but Not Quiet Markets Ahead Today
There is very little on the macroeconomic calendar today, but traders are expecting markets to remain cautious as we progress through the day’s trading sessions after a slew of tariff updates over the last couple of trading days and over the weekend. Traders are expecting to see some moves in the Asian session after US tariff updates over the weekend, with the possibility of some gapping in FX from Friday’s closing levels. The European session, which has nothing of note scheduled today, may see some reduced liquidity with French markets on a bank holiday, but most traders are expected to keep their focus firmly on newswires, especially as we approach the New York open and the potential for tariff updates increases. The US session also has nothing major scheduled, but the update from President Trump on Russia (and possibly other trade partners) is set to be front of investor focus, and most believe that volatility could really accelerate in the last session of the day.
