Wall Street closed weaker Friday, pressured late in the day by comments from the White House that 25% tariffs on Mexican and Canadian goods and a 10% levy on Chinese products would begin Saturday.
A Reuters report said collection of the duties from Mexico and Canada would be delayed until March 1, but the White House denied that.
The broad S&P 500 closed down 0.5%, or 30.64 points, to 6,040.53; the blue-chip Dow dropped 0.37%, or 337.47 points, to 44,544.66; and the tech-heavy Nasdaq fell 0.28%, or 54.31 points, to 19,627.44. Even with Friday’s losses, the three major indexes ended the month ahead. The benchmark 10-year yield rose to 4.553%.
The levies are in retaliation for “the illegal fentanyl that they have sourced and allowed to distribute into our country,” Karoline Leavitt, White House press secretary, said.
The WSJ said some officials are looking for a last-minute deal to avoid enacting the tariffs.
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Tariffs add to AI fears
On Monday, stocks tumbled after China’s DeepSeek said it built an artificial intelligence rivaling that of OpenAI and ChatGPT but at a fraction of the cost. That threw into question the U.S. mega spending to build AI models and prompted the White House to consider limiting Nvidia’s chip sales to China. Nvidia Chief Executive Jensen Huang is expected to meet President Donald Trump on Friday to discuss AI policy.
Stocks bounced back a bit around mid-week after Microsoft and Facebook parent Meta reiterated their AI spending goals, quelling fears companies would pull back AI dollars.
Next week, Google-parent Alphabet and online retail giant Amazon will report earnings.
Gold prices climb to record high
Gold prices rallied to a record high and put in their best monthly performance since August 2011 before easing back by day’s end. Gold prices have risen as investors have flocked to the yellow metal in a time of economic and global uncertainty. Investors are unsure how Trump’s tariff threats will play out.
Although 25% tariffs on Canada and Mexico and 10% levies on China are epected this weekend, no one knows yet if the tariffs will be across the board or if there will be exceptions. If it’s a blanket move, some economists say just the tariffs on Canada and Mexico could disrupt nearly $1.6 trillion in annual trade. China, Mexico and Canada in total account for just over 42% of all goods imported into the U.S., said James Knightley, chief international economist at Dutch bank ING.
Tariffs could also boost U.S. inflation, which has recently been stuck rather than dropping to the 2% level the Federal Reserve would like.
The Federal Reserve’s preferred inflation gauge, the U.S. personal consumption expenditures (PCE) price index, rose 0.3% last month after an unrevised 0.1% gain in November, in line with economists’ expectations. But core PCE, which excludes volatile food and energy sectors, remained stuck at 2.8%.
“While today’s result does not completely upend the ongoing disinflationary trend, it is yet another month of data showing that inflation remains persistently above the Fed’s 2% target,” said Lauren Saidel-Baker, economist at ITR economics. If Trump tariffs add to inflation this year, it “will limit the Fed’s ability to continue the rate-cutting cycle far into 2025. It is possible that we will even see rate hikes before the end of the year.”
But circling back to DeepSeek’s cost-efficient AI, “if AI ends up cheaper and more widely accessible, then this will be good for productivity, good for inflation and good for economic growth,” said Mark Dowding, BlueBay chief investment officer at RBC Global Asset Management. “It just isn’t good for those investors who may have chased a move in some stocks.”
Gold closed down about a half percentage point to $2,830.50 per ounce.
Company news
As investors wait to see what Trump’s policies will bring, they are focused on company news to drive stock market direction. Among the day’s biggest movers,
- iPhone maker Apple said late Thursday it topped quarterly earnings estimates and reported record gross margins. Shares gave up early gains to end down 0.67%.
- AbbVie shares jumped 4.7% after the drug company topped earnings estimates in the last three months of the year and gave an optimistic sales outlook for its immune-disease drugs Skyrizi and Rinvoq.
- Vertex Pharmaceuticals received Food and Drug Administration approval for Journavx, the first new nonopiod pain killer in decades. Shares ended up 5.31%.
- Walgreens shares slumped 10.3% for the worst day since June after the pharmacy chain halted its dividend to save money.
- Oil giant Chevron missed quarterly earnings estimates, and its shares dropped 4.56%.
- Consumer goods company Colgate-Palmolive’s quarterly sales missed Wall Street’s forecasts. Shares fell 4.66%.
Bitcoin
Bitcoin gave up some of the gains made after Fed Chairman Jerome Powell commented on crypto after the central bank’s policy meeting late Wednesday.
In response to a reporter’s question about the risk of digital assets, Powell said banks are “perfectly able to serve crypto customers as long as they understand and can manage the risks” and added that “a greater regulatory apparatus around crypto” from Congress would be “very constructive.”
The comments came on the heels of Trump’s favorable view towards bitcoin. He suggested establishing a national strategic bitcoin reserve. The Securities and Exchange Commission under Trump is also expected to be crypto-friendly.
Bitcoin was last down 2.71% to $101,886.50.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. 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 morning.
