US Stocks Fall Amidst Tariff Concerns
US stocks declined on Friday after the White House confirmed it would proceed with tariffs on Mexico, Canada, and China, effective Saturday. This escalated fears of a trade war with the nation's closest trading partners.
The Dow Jones Industrial Average (^DJI) dropped 0.72%, while the S&P 500 (^GSPC) decreased by 0.46%. The tech-heavy Nasdaq Composite (^IXIC) managed to maintain a slight gain of 0.22%.
Tariff Impact
The impending tariff deadline has revived concerns about the impact on the US economy from trade restrictions on its major partners. The uncertainty has also put Federal Reserve Chair Jerome Powell in a wait-and-see mode, fueling fears about potential inflation.
Dollar Gains
The dollar (DX-Y.NYB) strengthened, heading towards its best week since November. The tariff uncertainty has prompted a flight to safety, driving up the greenback.
Fed Inflation Gauge
The latest reading of the Fed's preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, rose 2.8% year-over-year in December, meeting economists' estimates. Despite this, market sentiment remains bullish on a June rate cut.
Tesla's Robotaxi Promise
Tesla CEO Elon Musk announced plans to launch "robotaxis in the wild" by June in Austin. However, investors remain skeptical, questioning whether Musk's promises will materialize.
Goldman Sachs on Gold
Goldman Sachs analysts recommended buying gold as a hedge against uncertainty amid the tariff threat. Gold futures hit record highs on Friday.