Pre-market futures are giving up their all-time high levels from Thursday (on the S&P 500 and Nasdaq, at least) as new sabre-rattling on tariffs for one of the top U.S. trading partners have roiled market indexes, now down more than half a point ahead of Friday’s open. The Dow is -300 points at this hour, the S&P 500 -40, the Nasdaq -120 and the small-cap Russell 2000 — the outperformer of the past week of trading — is -20 points.
Trump Threatens Canada with +35% Tariff on All Imports
Part of the reason, it could be argued, that market indexes have been trading at all-time highs is because the fears of tariffs upending the global economy in the near term have proven to be an overreaction: deadlines set in news headlines have not so far been binding. Currently, it’s August 1st for the expiration on the pause in tariffs, but nobody seems to be doing more than writing that in pencil.
So when President Trump announces a new +35% tariff on all Canadian goods imported to the U.S., the initial reaction is to recognize this as a real possibility, with oil & gas, automotive parts and heavy machinery — all top imports from Canada — sparking a sudden increase in inflation for those goods and their domestic suppliers. The current trend is that this trade deadline will also come and go without incident, but that’s further down in the markets’ thinking.
One of these days, however, real tariff policy will manifest. Only then will investors, economists and the Fed be able to ascertain the economic impact over time. Fed Chair Powell says he forecasts +0.6% inflation on tariffs once they do settle in, but he’ll be gone from his post in less than a year, so his opinion grows less important by the week. The stock market has yet to factor-in tariff inflation in as meaningful a way. We should probably enjoy it while it lasts.
Bitcoin Achieves Record-High $117.9K
Ahead of “Crypto Week” on Capitol Hill next week, where lenient regulatory policy is likely to dominate with a Republican majority on both houses, bitcoin is trading up to new all-time highs, to $117,880 per unit. Upon the results of the General Election last November, when the GOP swept Washington DC, bitcoin jumped from $37.5K to $45.7K in a month. This came with the clear bias that favorable bitcoin policy was forthcoming via Congress, and now here we are.
Next week will tell for certain, but clearly the bet is in. Bitcoin is up +103% over the past year, and it’s tough to see where any near-term headwinds may be located. The premier digital currency doesn’t even have goods-related tariff realities to grapple with. The sky may indeed be the limit for bitcoin here.
Story ContinuesWhat to Expect from the Stock Market Next Week
The amount of economic and earnings reports will pick up significantly next week, not only with the opening of the spigot to Q2 earnings season but with key inflation metrics coming out as well. The year-over-year headline Consumer Price Index (CPI) is also known as the “Inflation Rate,” and that has been at post-Covid lows going back a few months now.
In addition, Producer Price Index (PPI) numbers — the wholesale side of the equation, whereas the CPI represents retail — join Retail Sales, Imports & Exports and Industrial Production are just some of the reports due in the next week.
For earnings results, not only Tuesday’s tranche of big banks JPMorgan JPM, Citigroup C and Wells Fargo WFC are releasing reports, but so are Netflix NFLX, Johnson & Johnson JNJ, GE GE and other important financials Bank of America BAC, Goldman Sachs GS and American Express AXP, among others.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report
Bank of America Corporation (BAC) : Free Stock Analysis Report
Wells Fargo & Company (WFC) : Free Stock Analysis Report
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
Citigroup Inc. (C) : Free Stock Analysis Report
GE Aerospace (GE) : Free Stock Analysis Report
Johnson & Johnson (JNJ) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
American Express Company (AXP) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
