S&P 500, Nasdaq hit record highs on rate-cut hope, – Business News
President Trump on Friday abruptly ended commerce talks with Canada over its looming “egregious tax” on American tech corporations – briefly throwing cold water on the scorching stock market earlier than it rallied to record highs.
The S&P 500 rose 0.5%, or 32 factors, to close at an all-time high of 6,173.07. The Nasdaq additionally closed at record, gaining 105 factors, or 0.5% to twenty,273.46.
The Dow Jones Industrial Average climbed more than 400 factors, or 1%.
Traders work on the ground on the New York Stock Exchange on June 26, 2025. REUTERS
The Nasdaq and S&P 500 had earlier surpassed record highs amid mounting hopes for rate of interest cuts this yr, easing world tensions and a resurgence of AI enthusiasm.
But traders shortly reversed course after Trump blasted key trading companion Canada in a post on Truth Social, his social media platform, at 1:44 p.m. ET.
“We have just been informed that Canada, a very difficult Country to TRADE with…has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country. They are obviously copying the European Union, which has done the same thing,” Trump wrote.
“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately.”
It’s a important setback for traders who had been looking forward to more commerce offers, particularly since Canada is such a giant commerce companion. US items commerce with the nation totaled $762 billion final yr, in accordance with the workplace of the US commerce consultant.
Federal Reserve Chairman Jerome Powell talking on June 25, 2025. AP
Canadian officers stated this month they won’t put the digital providers tax – which might hit US corporations like Amazon, Google and Meta – on pause regardless of sturdy blowback from the US.
Earlier on Friday, growing hopes of rate of interest cuts within the second half of this yr helped spur a market rally, as a number of Fed officers have joined the call over the previous week to think about easing coverage as quickly as this fall – and even by July.
Trump has led the push for decrease rates of interest, lobbing insults at Federal Reserve Chair Jerome Powell – who he lately referred to as a “very average mentally person” with a “low IQ” – as he pressures him to slash the goal price, at the moment at 4.25% to 4.5%.
S&P 500 index graph displaying a rise to six,169.36.
Data launched Friday confirmed the core personal consumption expenditures price index, the Fed’s most popular inflation gauge excluding unstable food and vitality costs, rose more than anticipated final month to 2.7%.
That might be a signal that Trump’s tariffs are beginning to hit costs, which might threaten the likelihood of near-future price cuts.
“While one month does not make a trend, if we were to see another few months of escalating inflation data, it could push the Federal Reserve to continue its rate cut pause into 2026,” Robert Ruggirello, chief investment officer at Brave Eagle Wealth Management, stated in a observe Friday.
Nasdaq has hit a record high.
A tentative ceasefire within the Israel-Iran battle, in addition to experiences Friday that the EU is assured it may attain a tariff deal with the US earlier than a July deadline, additionally helped shares quickly get better from their lows in April, when Trump revealed sweeping tariffs.
Meanwhile, chipmaker Micron on Wednesday reported upbeat earnings, because of growth in knowledge middle income, and Jensen Huang’s Nvidia, which acts as a bellwether for the AI industry, hit a recent record on Thursday and regained its title because the world’s most dear company.
Wedbush Securities analyst Dan Ives argued that each Nvidia and Microsoft will doubtless attain $4 trillion market caps this summer season, as artificial intelligence continues to characterize the largest tech transformation in 40 years, he wrote in a observe Friday.
Trump introduced a cease-fire between Iran and Israel earlier this week. AP
Prior to Friday’s close, the S&P 500 has surged more than 23.5% and the Nasdaq about 32% since their current lowest close on April 8, as panicked traders led a large sell-off on fears that Trump’s tariffs might reheat inflation.
“It’s not surprising to see stocks back at record highs as April’s volatility was actually normal, and markets don’t only go up, especially after two strong years,” Ruggirello stated.
“It’s clear that the market thinks the [Israel-Iran] conflict will remain contained, although that could change at anytime. While stocks are back at record highs, that does not mean that there won’t be volatility during the second half of 2025.”
