S&P 500, Nasdaq finish at new records as markets brush off renewed trade tensions

4:05pm: Record closes

Wall Street wrapped up the week with record gains on Friday, as investors weighed the latest economic data and looked ahead to the second half of the year, brushing off renewed trade tensions late in the session.

The Dow Jones led the rally, jumping 432 points, or 1%, to close at 43,819. The blue-chip index outperformed as cyclical and industrial stocks saw renewed buying interest heading into quarter-end.

The S&P 500 rose 32 points, or 0.5%, to finish at 6,173—marking its first record close since February. The benchmark index had hovered near all-time highs for much of the day, supported by optimism around a U.S.–China trade truce and growing hopes for a Federal Reserve rate cut in the near future.

The Nasdaq Composite added 106 points, or 0.5%, to settle at a record 20,273, with tech stocks once again showing resilience and helping drive the broader rally.

Small-cap stocks lagged, however, with the Russell 2000 slipping 2 points, or 0.1%, to 2,170, as investors remained cautious toward riskier segments of the market amid ongoing economic uncertainty.

Stocks had pulled back briefly in the afternoon after President Trump announced he was terminating trade talks with Canada, injecting fresh tension into North American trade relations. But the broader market quickly recovered, helped by strong momentum in tech and optimism over global trade progress.

With trading volumes moderate as the quarter came to a close, investor focus is now shifting to key economic reports and the upcoming earnings season—two catalysts that could help set the tone for markets in July and beyond.

3:30pm: Proactive headlines

• Seeing Machines Ltd has launched a six-week pilot of its Guardian Generation 3 driver safety system with a North American arm of Mitsubishi Electric, a move Stifel views as a positive step toward expanding in the regional automotive safety market.
• North Bay Resources Inc. is initiating a private placement offering structured with 60% equity and 40% physical gold sourced from its own production, priced at $0.001 per unit.
• Sona Nanotech Inc. has received ethics committee approval to begin enrolling patients in a feasibility study of its Targeted Hyperthermia Therapy for late-stage melanoma, using proprietary gold nanorod technology.
• Vinanz Ltd has boosted its cryptocurrency holdings to over 65 bitcoin after purchasing 5.85 bitcoin this week at an average price of $107,863 per coin.

2:59pm: Trump terminates Canada tariff talks

US President Donald Trump has announced the immediate termination of all trade talks with Canada, ending months-long negotiations between the two countries following Canada’s announcement of a new digital services tax (DST). 

The DST targets large foreign and domestic digital companies, including major US tech firms such as Meta, Apple, Google, Amazon, and Microsoft.

Set to take effect retroactively from 2022, starting on Monday, the DST imposes a 3% tax on large digital companies' revenues from online advertising, social media, online marketplaces, and user data licensing in Canada.

He accused Canada of copying the European Union, which has implemented a similar tax, and described it as “a direct and blatant attack on our country.”

“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” Trump wrote in a post on Truth Social. 

Trump posted on Truth Social that due to this digital services tax, the US will end all trade discussions with Canada effective immediately and plans to inform Canada within the next week about the tariff rates Canada will be required to pay for conducting business with the US.

2:30pm: Gold holds strong despite volatility

Gold prices faced a volatile week amid fluctuating geopolitical tensions but are set to close resiliently at around $3,285 per ounce, signaling underlying strength in the precious metal.

Jefferies analysts point to growing market optimism fueled by expectations of US interest rate cuts, which they say could further support gold’s appeal as a safe haven.

“Even with recent price fluctuations, gold remains significantly undervalued in the equity markets, which are pricing in just $2,853 per ounce compared to spot prices near $3,285,” Jefferies analysts wrote.

The US dollar’s decline to a three-year low on rate cut speculation and potential Federal Reserve leadership changes is helping to bolster gold’s outlook. Meanwhile, progress on trade deals with key US partners by the Labor Day deadline is easing global economic uncertainty, adding to risk-on sentiment that could spur further investment flows into commodities.

1:35pm: Decoding Fedspeak

Deutsche Bank analysts say the Federal Reserve remains deeply divided on the near-term policy path, as evidenced by the June Summary of Economic Projections (SEP) and the subsequent stream of Fedspeak.

While few officials have explicitly stated their rate expectations for this year, analysts have inferred positions based on the tone of recent commentary. Notably, Governor Bowman—traditionally a hawk—surprised markets by indicating she could support a rate cut as early as July, aligning her with Governor Waller at the dovish end of the spectrum. Deutsche Bank places both at the bottom of the dot plot, projecting 75 basis points of easing this year.

Chair Powell’s recent Congressional testimony echoed his post-FOMC messaging, suggesting that while he expects inflation to rise in the summer months, he is not yet ready to commit to rate cuts.

“Although Powell’s press conference sounded like he was hawkish relative to the median, we suspect he and the rest of Fed leadership…may have stuck with two cuts strategically,” Deutsche Bank said. A September rate cut, in their view, would likely require both a weaker-than-expected jobs report and inflation data consistent with or better than the Fed’s projections.

Looking ahead, Deutsche Bank warns that divisions within the Fed are unlikely to abate. Several regional presidents and governors appear to be at the top of the dot plot, with no cuts penciled in. The analysts also note that some 2025 voters—like Barr, Kugler, and possibly Cook—may resist easing next year as well. With a new Philadelphia Fed president and a new chair set to take over in 2026, the report concludes that “divisions are likely to persist into 2026,” making consensus on monetary policy increasingly difficult.

12:20pm: Wall Street powers ahead

Stocks are charging higher at midday Friday, adding to a strong week of gains and pushing major indexes closer to uncharted territory.

The Dow Jones Industrial Average is leading the way, up 1.3% as industrial, consumer discretionary, and financial names take the spotlight. The S&P 500 has risen 0.7% and is trading firmly in record-high territory—poised to notch another all-time closing high if momentum holds into the afternoon. Meanwhile, the Nasdaq Composite is up 0.6%, also climbing through record levels thanks to continued strength in tech.

The upbeat mood on Wall Street is being driven by a combination of renewed optimism over global trade agreements, encouraging economic data fueling hopes of a Fed rate cut, and another surge in AI-related tech shares. Market breadth is solid, with advancers outpacing decliners across all major indexes, and the CBOE Volatility Index (VIX) is down more than 1%, signaling a calm and confident market.

11:25am: Investor sentiment more positive

Chris Beauchamp, Chief Market Analyst at IG, says investor sentiment has turned sharply more positive amid easing geopolitical and economic concerns.

“A week that began with such uncertainty has given way to a resurgent bull market for equities,” Beauchamp noted, pointing to renewed hopes for rate cuts, a holding ceasefire in the Middle East, and fading concerns over tariff deadlines as key drivers of the market rally.

Beauchamp added that growth stocks are back in favor, while value-oriented indices like the FTSE 100 continue to lag.

10:50am: Rare earth deal agreed

The US and China have agreed to accelerate rare earth shipments to the US in a move aimed at easing trade tensions and stabilizing global supply chains disrupted by months of tariff retaliation between the two economic powers.

The announcement follows US President Donald Trump's remarks earlier this week that a deal had been signed with China and that further agreements, potentially involving India, could follow.

During trade talks in Geneva in May, China committed to rolling back certain non-tariff measures imposed since April, though how those would be reversed remained unclear.

Wedbush analysts said the deal could have a meaningful impact on specific materials and suppliers. “We would anticipate that Indium is one of the materials which could see more expedited granting of export licenses,” Wedbush wrote in a note Friday.

“Assuming Beijing expedites licenses, we believe it is very likely AXT could enjoy a sharp rebound in InP shipments positioning it to exceed current expectations for the out quarters.”

10:30am: Services spending slumps

US economic data for May paints a downbeat picture, with Comerica's Bill Adams noting that the month was marked by weak consumer spending and broad-based declines across key indicators.

While a drop in personal income may seem concerning, Adams pointed out that “wage and salary income was still solidly higher in the month,” and the overall decline was driven by more volatile components. However, the real surprise was the slowdown in services spending, which saw its weakest two-month increase since 2020 — a sign that consumer caution is spreading beyond big-ticket goods.

Adams attributed the pullback to a combination of tariff shocks and financial market volatility, which “spooked consumers” and led to reduced spending on travel, restaurants, and hotels.

While second-quarter GDP may show growth, Adams cautioned it will be "largely an artifact of less imports, not stronger core measures of economic activity." He expects growth to remain subdued through the rest of 2025, with momentum returning in 2026 as income tax cuts begin to offset the drag from tariffs.

9:50am: S&P hits record high

Wall Street opened Friday on an upbeat note, with the S&P 500 touching a fresh intraday record of 6,161, up 0.3% in early trading. The Dow Jones added 218 points, or 0.5%, to trade at 43,604, while the Nasdaq gained 67 points, or 0.3%, to 20,235. The small-cap Russell 2000 edged up 0.1%.

The rally comes despite hotter-than-expected core inflation data for May. The Fed’s preferred inflation gauge, the core PCE price index, rose 2.7% year over year, slightly above the 2.6% estimate. On a monthly basis, core prices climbed 0.2%, also above expectations. Headline PCE matched estimates at 2.3% annually and 0.1% monthly. However, personal spending unexpectedly dipped 0.1%, while personal income dropped 0.4%, potentially tempering concerns about overheating demand.

Investors are parsing the data for clues on the Federal Reserve’s next move. Inflation remains above the Fed’s 2% target, but signs of weakening consumer activity may nudge policymakers closer to cutting rates later this year.

Meanwhile, geopolitical headlines are adding a layer of optimism. China’s Ministry of Commerce said both sides have confirmed framework details for upcoming U.S.-China talks in London, with hopes of restoring economic cooperation. Treasury Secretary Bessent echoed that sentiment, saying “we don’t want to decouple” and that a deal could be wrapped up by Labor Day. “This is a de-escalation,” Bessent told FBN, noting confidence that China will approve key U.S. exports.

Elsewhere, anticipation is building around the Trump administration’s forthcoming AI Action Plan, expected July 23. The initiative aims to fast-track power grid connections, expand federal land use for data centers, and streamline permitting under the Clean Water Act—moves designed to support the energy demands of AI growth.

Nike was a standout at the open, with shares surging nearly 16% despite warning that new tariffs could add about $1 billion in costs. The company expects a 75-basis-point hit to FY26 gross margins, front-loaded in Q1. To mitigate the impact, Nike plans to shift sourcing out of China, implement U.S. price hikes beginning in fall 2025, and share costs across its supply chain.

Markets remain focused on the Fed’s next steps, but for now, investor sentiment is leaning bullish—with new highs to show for it.

8:50am: Core inflation tops forecasts in May

US inflation remained above the Federal Reserve’s 2% target in May, with core prices rising more than expected, complicating the case for interest rate cuts later this year.

The Personal Consumption Expenditures (PCE) price index—the Fed’s preferred inflation gauge—rose 2.3% year-over-year, in line with estimates. On a monthly basis, prices climbed 0.1%. However, core PCE, which strips out food and energy, rose 2.7% annually and 0.2% monthly, both higher than expected.

Adding to concerns, personal spending declined 0.1%, while personal income unexpectedly fell 0.4%, missing estimates for a 0.3% increase.

The data comes as investors look for clear signals on when, or if, the Fed might begin cutting interest rates.

8am: S&P 500, Nasdaq predicted to reach new highs

Wall Street stock futures pointed higher early on Friday, with the broad-market S&P and the tech-heavy Nasdaq expected to reach new highs, buoyed by positive news on a trade deal with China and the fragile ceasefire in the Middle East. 

S&P 500 futures were 0.34% higher an hour and a half before the market open, with those for the Dow Jones up by the same margin while Nasdaq futures traded 0.44% firmer. 

Nike Inc (NYSE:NKE, ETR:NKE) surged over 10% in pre-market trade on optimism that a turnaround is starting to bear fruit, even after the sports goods giant reported an 86% drop in quarterly profit to $211 million, largely due to deep discounts and efforts to clear excess inventory.

US stocks closed just a whisker away from all-time highs on Thursday.

The S&P 500 climbed 0.8%, coming within striking distance of its February record close. The Nasdaq added 1%, hust a few points shy of its historic peak, while the Dow advanced 0.9%.

News this morning is that US President Donald Trump has confirmed a signed trade deal with China, ending months of talks.

Beyond that, interative investor's Richard Hunter notes that there has been a flourish of more positive news that's pushing global markets to fresh highs. These include economic data in the US that suggests the economy isn't approaching stagflation territory, and suggestions from the White House of a possible extension to July's trade tariff deadlines. 

"Investors have fresh wind in their sails, perhaps most starkly illustrated by the benchmark S&P 500 in the US, which has rallied by more than 20% since its April low to come within just a few points of its highest ever level," Hunter commented. 

"The 30% rebound of the technology-heavy Nasdaq is even more striking, as the 'Magnificent Seven' have come back into fashion. Another record high for Nvidia, itself enjoying a bounce of more than 60% since April, was accompanied by notable buying in the likes of Meta Platforms and Apple."

Other global markets are also benefiting from the more positive mood. In Europe, London's FTSE 100 rose close to 0.6% in morning trading, while Frankfurt's DAX gained 0.8% and the Paris CAC 40 jumped 1.4%. 

Markets were more mixed in Asia. Tokyo's Nikkei 225 closed 1.4% up, but Hong Kong's Hang Seng index slipped 0.2% and Shanghai's SSE Composite fell 0.7%.