STORY: U.S. stocks ended mixed on Friday, as the Dow dropped seven-tenths of a percent, but the S&P 500 and Nasdaq each gained modestly to notch more record high closes.
On the tariff front, the U.S.-Japan trade deal and recent signs of progress in talks with the European Union helped fuel Wall Street's gains.
Markets also monitored President Trump's visit to the Federal Reserve's headquarters on Thursday, following months of Trump's criticizing Fed Chair Jerome Powell for interest rates the president views as too high.
But Carol Schleif, chief market strategist at BMO Private Wealth, said a sharp rate cut would send the bond market reeling.
“If someone went in there and cut it 100 or 200 or 300 basis points, you would most likely really see those longer-term [bond] yields blow out. Because there would be so much consternation in the markets over that and the loss of independence, if you will, from the Fed, that it would have many more ripple impacts that would be concerning.”
The Fed is expected to hold rates steady at its policy meeting next week; traders see a 60% chance of a rate cut in September, according to CME's FedWatch tool.
Stocks on the move Thursday included Alphabet, which rose 1% as the search giant's results boosted confidence that heavy investment in AI is paying off.
On the flip side, Tesla's stock tumbled more than 8% after CEO Elon Musk warned of a “few rough quarters” as the U.S. government cuts support for EV makers. Tesla's stock has fallen around 25% so far in 2025.
Shares of IBM dropped more than 7 and a half percent after its second-quarter results fell flat with investors, hampered by disappointing sales in its core software division.
And American Airlines' stock tumbled nearly 10% after the carrier forecast a big third-quarter loss, hurt by sluggish domestic travel demand.
