Tariff turbulence and crypto euphoria set tone for Friday’s open

Introduction#

Thursday’s session closed on a cautiously upbeat note, yet the overnight news flow has shifted sentiment before the bell. According to Monexa AI, the S&P 500 (^SPX) ended at 6,280.46, up +0.27%, while the Dow Jones Industrial Average (^DJI) added +0.43% to 44,650.64. Strength in airlines, refiners and a select group of semiconductor names offset weakness in software and consumer defensives. After the close, headlines turned squarely to trade: President Trump threatened a sweeping 35% tariff on Canadian imports effective August 1, broadening the administration’s revenue-raising strategy and rattling equity futures in the early hours of Friday. Simultaneously, bitcoin pierced a new all-time high above $125,000, lifting crypto-adjacent shares and injecting a speculative undercurrent into pre-market chatter.

Market Overview#

Yesterday’s Close Recap#

A mixed but generally constructive tape unfolded on Thursday. Airlines powered the Industrials group, Advanced Micro Devices’ upbeat upgrade helped steady semiconductors, and modest defensive buying surfaced in Utilities. Conversely, large-cap software, cybersecurity and packaged-food names lagged, partly on valuation concerns and tariff exposure. Trading volumes ran in line with the 50-day average as many desks began positioning for the first full week of second-quarter earnings.

Overnight Developments#

European equity benchmarks spent most of the London morning in the red after the tariff headlines hit, with the STOXX 600 off roughly -0.4% by 6 a.m. ET. Asia closed mixed: the Nikkei 225 faded -0.6% on profit-taking in exporters, while the Hang Seng rallied +0.9% thanks to ongoing mainland liquidity support. In rates, U.S. Treasury yields are little changed, holding the 10-year near 4.18%; bond traders cite the lowest realized volatility since 2022, underscoring a wait-and-see stance before next week’s CPI and PPI prints. Energy markets are steady, with Brent hovering at $87.10, as traders assess whether Canada might retaliate in ways that could disrupt crude-by-rail flows to U.S. refineries.

Macro Analysis#

Economic Indicators to Watch#

The macro calendar is light today—only June wholesale inventories and the University of Michigan’s preliminary July consumer-sentiment survey are scheduled. Consensus sees sentiment slipping to 71.0 from 71.8, but traders care more about the five-year inflation expectations figure following two months of upside surprises. Next week’s CPI (Wednesday) and PPI (Thursday) will quickly eclipse today’s data in importance, particularly after June core PCE trended toward the Fed’s 2% objective. Fed-funds futures continue to price a 63% probability of a first rate cut at the September 17 FOMC meeting, up from 58% a week ago, according to CME Group’s FedWatch tool.

Global/Geopolitical Factors#

Trade once again dominates the geopolitical backdrop. The White House framed the pending 35% levy on Canadian imports as a “temporary revenue measure” that excludes NAFTA-qualifying goods, yet Ottawa called the proposal “a direct assault on North American integration.” Investors remember the 2018–19 steel‐and‐aluminum skirmish that shaved roughly 30 bps off U.S. GDP, according to Congressional Budget Office estimates. Separately, the ECB’s Isabel Schnabel told the Financial Times that the bar for another rate cut is “very high,” sending the euro marginally higher and flattening the German Bund curve.

Sector Analysis#

Sector Performance Table#

Dominant Sector Themes#

Financial Services topped the leaderboard as asset managers such as BX and banks like JPM benefitted from a steeper yield curve and healthy second-quarter capital-markets volumes. Energy also posted respectable gains led by refiners VLO and PSX, supported by strong gasoline crack spreads. Industrials would have finished far worse were it not for double-digit rallies in airlines; the group’s benchmark index actually fell -1.33% because defense primes and machinery names succumbed to profit-taking after a nine-session advance.

Technology’s modest pullback masked a stark bifurcation: hardware and semiconductor equipment rallied, but large-cap software and cybersecurity stocks lagged. PTC lost -7.55%, FTNT fell -6.92%, and ADSK dropped -6.89%, reflecting multiple compression as investors rotated into tangible AI beneficiaries. Meanwhile, AMD gained +4.15% after HSBC’s price-target hike to $200, signaling that the sell-side increasingly views AMD as a credible challenger to Nvidia in the data-center GPU market.

Consumer Defensive suffered the steepest slide as packaged-food heavyweights digested weak prints from CAG and mounting tariff concerns. Utilities were mixed; a -6.41% plunge in AES related to balance-sheet questions offset mild gains across regulated electric names.

Company-Specific Insights#

Earnings and Key Movers#

The day’s marquee earnings story remained DAL. The carrier reinstated full-year EPS guidance of $5.25–$6.25 and raised its quarterly dividend by 50% to $0.15, sending the stock up +11.99%. Peers UAL and LUV rode the tailwind higher, up +14.33% and +8.14% respectively, underscoring pent-up demand for premium travel even as economy-class capacity is trimmed. The resurgence in travel bodes well for credit-card issuers such as AXP, which climbed +2.49%.

In sharp contrast, consumer-products firm HELE cratered -22.71% after reporting that first-quarter adjusted EPS collapsed to $0.41 from $0.93 a year ago, missing consensus by a wide margin. Management blamed roughly 8 percentage points of lost revenue on tariff headwinds, spotlighting how quickly policy shocks can upend margins for import-dependent brands. Another packaged-goods laggard, CAG, slid -4.37% on a glum FY26 outlook that signaled zero organic sales growth. These prints explain why Consumer Defensive finished at the bottom of the sector ranking despite Estée Lauder’s +6.34% jump on restructuring optimism.

Among high-beta names, crypto exchange COIN advanced +4.04% after bitcoin’s record run, yet H.C. Wainwright’s downgrade to “Sell” highlights valuation tension: the stock now trades at nearly 56 times 2025 profit estimates. Investors will parse today’s Senate Banking Committee hearing on stablecoin rules for additional regulatory clarity.

Looking ahead, Wall Street will turn to MS next Wednesday. Sell-side forecasters have nudged their second-quarter EPS estimate down to $2.02, according to FactSet, but the stock’s full recovery from April volatility and year-to-date +36% gain leave little margin for disappointment. Equity-trading revenue remains the swing factor, especially given strong volatility in single-stock options.

Conclusion#

Morning Recap and Outlook#

Overnight developments have set up a more complicated open than Thursday’s benign close might suggest. The threat of a blanket 35% Canada tariff introduces a fresh macro headwind just as corporate America gears up for earnings season. Investors will watch whether Ottawa retaliates, whether suppliers accelerate near-shoring plans, and whether Consumer Defensive names issue incremental warnings. On the flip side, record-setting bitcoin highlights still-robust risk appetite in pockets of the market. Airlines’ outperformance also indicates that U.S. consumers continue to favor experiences over goods, potentially cushioning the economy from tariff-induced price increases.

In the very near term, futures indicate a modestly lower open, but volatility gauges such as the VIX at 15.78 remain subdued. That calm could quickly evaporate if trade rhetoric escalates or if today’s Michigan sentiment survey disappoints. Positioning wise, desks report lightening technology overweights and adding to Energy and Financials on the view that balance-sheet strength and cash-flow visibility will command premiums in a choppy policy environment.

Key catalysts to monitor through the session include any official Canadian response, real-time air-fare booking data for confirmation of the travel boom, and crypto-exchange volumes as a proxy for speculative flow. With the S&P 500 less than 0.2% from a fresh record high and breadth increasingly selective, the burden of proof rests on earnings to justify lofty valuations. Risk managers therefore remain laser-focused on company-specific execution, especially among tariff-exposed consumer names and richly-priced AI beneficiaries.

For now, the playbook revolves around balancing macro uncertainty with micro opportunity: overweighting domestically oriented, cash-generative franchises that enjoy pricing power, while trimming exposure in names whose margins depend on imported inputs vulnerable to policy whiplash. As the opening bell approaches, traders would do well to keep one eye on Washington and the other on corporate conference calls—because in the current environment, either can shift the narrative in a single headline.

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