US Stocks Fall on Tariff News

U.S. stocks declined on Friday after the White House confirmed tariffs against Mexico, Canada, and China would take effect on Saturday, reigniting fears of a trade war with the nation's closest trading partners.

Tariffs Announced

White House Press Secretary Karoline Leavitt stated that 25% tariffs would be imposed on goods from Mexico and Canada, and a 10% tariff on goods from China. The S&P 500 (^GSPC) fell 0.2%, while the Dow Jones Industrial Average (^DJI) dropped 0.5%. The Nasdaq Composite (^IXIC) remained in positive territory but lost ground, climbing slightly above the flat line.

Impact on Economy

The tariff news overshadowed earlier positive updates, including strong earnings from Apple (AAPL) and an inflation reading that met expectations. The looming tariff threat has raised concerns about the impact on the economy from a clampdown on the U.S.'s major trading partners.

Dollar Rises

The uncertainty over tariffs has led the U.S. dollar (DX-Y.NYB) to its best week since November. The dollar index gained 0.5% on Friday, rebounding from its worst performance in over a year last week.

Fed Policy

Federal Reserve Chair Jerome Powell has adopted a wait-and-see approach, with potential tariffs potentially fueling inflation. The personal consumption expenditures index, a gauge of inflation preferred by the Fed, rose 2.8% year over year in December, meeting economist estimates.

Earnings Outlook

Google parent Alphabet (GOOG, GOOGL) and Amazon (AMZN) are scheduled to report quarterly earnings next week. Investors will monitor their responses to the success of Chinese startup DeepSeek, which has prompted questions about massive AI spending by U.S. tech companies.

Economic Data

The end of the week will bring the release of the January jobs report, a key economic indicator that the Federal Reserve will closely observe.