After beginning the session with a pronounced upward movement, stocks faced downward pressure throughout the day on Friday. The primary market indices retreated from their initial highs, eventually slipping into negative territory by the end of trading.
The key indices concluded the day slightly above their session lows. The Dow Jones Industrial Average declined by 337.47 points, or 0.8%, to close at 44,544.66. The S&P 500 Index dropped 30.64 points, or 0.5%, to 6,040.53, while the Nasdaq Composite Index fell by 54.31 points, or 0.3%, to end at 19,627.44.
For the week, the Dow experienced a modest increase of 0.3%. Conversely, the S&P 500 witnessed a decline of 1.0%, and the Nasdaq saw a more pronounced drop of 1.6%.
A significant downward shift in stocks occurred in the afternoon session following confirmation from White House Press Secretary Karoline Leavitt that President Donald Trump's previously threatened tariffs against major U.S. trading partners would take effect starting Saturday.
Leavitt announced that the Trump administration would be instituting tariffs of 25% on imports from Mexico and Canada, alongside a 10% tariff on goods from China. These measures, according to the White House, are in response to the illegal distribution of fentanyl by these nations, which has resulted in tens of millions of American deaths.
The impending tariffs sparked concerns about potential inflationary pressures that could necessitate prolonged inaction from the Federal Reserve.
Earlier in the trading day, stocks enjoyed a boost from positive earnings reports from Apple (AAPL), which outperformed analyst expectations in its fiscal first quarter in terms of both revenue and profit.
However, as the day unfolded, Apple’s shares retreated from their peak, ultimately decreasing by 0.7% after earlier climbing as much as 4.0%.
Further buying interest was driven by a Commerce Department report indicating that U.S. consumer prices rose in December, aligning with economist projections.
Conversely, Chevron (CVX) shares struggled, negatively affecting the Dow, with the energy company’s stock plunging 4.6% following disappointing fourth-quarter earnings results.
Sector Analysis:
Oil stocks saw significant declines during the session, with the NYSE Arca Oil Index dropping 2.9%. Both Chevron's stock performance and falling crude oil prices contributed to the sector's downturn.
Rising treasury yields impacted housing stocks adversely, as evidenced by a 2.6% decline in the Philadelphia Housing Sector Index.
Natural gas, steel, and transportation sectors likewise experienced marked weaknesses, while networking stocks showed notable strength.
International Markets:
In international markets, Asia-Pacific stock performance was mixed on Friday. Japan's Nikkei 225 moved up slightly by 0.2%, alongside a 0.5% rise in Australia's S&P/ASX 200 Index, whereas South Korea's Kospi decreased by 0.8%.
In contrast, European markets showed modest gains on the day. The U.K.'s FTSE 100 Index rose by 0.3%, France's CAC 40 Index edged up by 0.1%, and Germany's DAX Index finished just above unchanged.
Bond Market Developments:
In the bond sector, U.S. Treasuries settled firmly into negative territory after early indecision. Consequently, the yield on the benchmark ten-year note, which inversely correlates with price, rose 5.7 basis points to 4.569%.
Outlook:
Next week's trading is anticipated to focus on the Labor Department’s monthly employment report. Additional attention is expected for data on job openings and activity within the manufacturing and service sectors.
Corporate earnings announcements from high-profile companies such as Alphabet (GOOGL), Amazon (AMZN), Pfizer (PFE), and Disney (DIS) could also influence market movements.
