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Stock prices plummet on both Bay Street and Wall Street; Canadian dollar gains value due to fresh tariffs imposed.

Stock markets worldwide, such as Wall Street in the United States and the TSX in Canada, suffered significant declines during trading hours on Friday, with the implementation of fresh tariffs leading to these losses.

Markets take a dive on Bay Street and Wall Street, while the Canadian dollar gains strength due to...
Markets take a dive on Bay Street and Wall Street, while the Canadian dollar gains strength due to fresh tariff announcements.

Stock prices plummet on both Bay Street and Wall Street; Canadian dollar gains value due to fresh tariffs imposed.

The ongoing trade disputes and tariffs have been a significant topic in the global economic landscape, with a mixed but generally modest impact on the U.S. stock market. Despite the potential for slower global economic growth, the markets have shown resilience and a certain complacency towards tariff risks.

Higher U.S. tariffs can lead to increased costs for firms, squeezed profit margins, and reduced consumer demand, which could slow economic growth both domestically and internationally. However, the U.S. stocks have managed to remain near record highs, partly due to strong earnings and secular growth trends like artificial intelligence.

The economic effects of tariffs are often delayed rather than immediate, causing price increases in the U.S. and potentially slower global growth, especially if other countries retaliate with their own tariffs. Despite these challenges, analysts do not currently foresee a global recession and expect markets to begin looking beyond tariff uncertainty towards 2026 when growth may improve.

A notable phenomenon in recent times is "headline fatigue," where investors have become less reactive to news about tariffs and trade disputes, leading to more stable equity prices despite ongoing uncertainties. Market volatility linked to tariff announcements has diminished compared to earlier years, but the higher tariffs could still exacerbate inflation and weigh on corporate earnings over time.

Last week, the S&P 500 experienced its biggest decline since May 21, with a 1.6% fall, marking its fourth straight loss. The latest moves have given 66 countries, the European Union, Taiwan, and the Falkland Islands another seven days, instead of taking effect on Friday as initially stated by President Donald Trump.

The Fed Chair Jerome Powell has been pressured by Trump to cut the benchmark rate, though that decision isn't his to make alone. Employers added just 73,000 jobs in July, sharply lower than economists expected. The market's odds of a quarter-point cut by the Federal Reserve in September rose to around 87%.

Many companies have warned about import taxes raising costs, eating into profits, and raising prices for consumers. For instance, Walmart, Procter & Gamble, and numerous other companies have expressed concerns about these issues. Stocks fell across the world, with Germany's DAX falling 2.7%, France's CAC 40 falling 2.9%, and South Korea's Kospi tumbling 3.9%.

The U.S. stock market had its worst day since May on Friday, with the S&P 500 falling 101.38 points, the Dow dropping 542.40 points, and the Nasdaq giving up 472.32 points. Apple fell 2.5% after beating Wall Street's profit and revenue forecasts, while Amazon fell 8.3% despite reporting encouraging profit and sales for its most recent quarter.

President Donald Trump imposed tariffs on imports from a number of U.S. trading partners, including raising tariffs on Canada to 35%. The Dow Jones Industrial Average fell 1.2%, and the Nasdaq composite fell 2.2%. The Toronto Stock Exchange lost ground on Friday, closing down 239 points or 0.88%.

The Fed's preferred measure of inflation showed that prices ticked higher in June, rising to 2.6% from 2.4% in May. Despite these challenges, the markets are expected to continue navigating the tariff landscape, with analysts looking beyond the current uncertainties towards potential improvements in the future.

  1. The ongoing trade disputes and tariffs have significant implications for the global economy and U.S. stock market, causing increased costs for firms, potential reduced consumer demand, and a delayed impact on prices.
  2. Despite the potential for slower global economic growth, the U.S. stocks have remained near record highs due to strong earnings, secular growth trends like artificial intelligence, and a certain level of complacency in the face of tariff risks.
  3. A notable trend in recent times is "headline fatigue," where investors have become less reactive to news about tariffs and trade disputes, leading to more stable equity prices despite ongoing uncertainties.
  4. The economic effects of tariffs and the potential for a trade war can have a profound impact on various sectors of the economy, with companies like Walmart, Procter & Gamble expressing concerns about import taxes raising costs, eating into profits, and raising prices for consumers.

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