Equities little changed; US yields dip as investors look to tariffs, earnings, economic data
U.S. consumer sentiment improved in July and inflation expectations declined, but households still saw substantial risk of price pressures increasing, the University of Michigan's Surveys of Consumers released on Friday showed.
Another report showed U.S. single-family homebuilding dropped to an 11-month low in June as high mortgage rates and economic uncertainty hindered home purchases, suggesting residential investment contracted again in the second quarter.
On Thursday, news of stronger-than-expected U.S. retail sales and a drop in jobless claims suggested modest improvements in economic activity and helped push the S&P 500 and Nasdaq to record closing highs.
On Friday, the mood dimmed after the Financial Times reported that U.S. President Donald Trump is pushing for a minimum tariff of 15% to 20% on the European Union. The report said he was unmoved by the latest EU offer to reduce car tariffs and would keep those duties at 25% as planned.
"Tariff headlines this afternoon reminded investors that volatility is likely to persist through the start of August." said Lindsey Bell, chief investment strategist at 248 Ventures. "Investors may be taking some money off the table going into the weekend given lingering tariff uncertainty and a market that has a premium valuation after reaching new highs."
She noted that these concerns were on display in shares of American Express (AXP.N), opens new tab and Netflix (NFLX.O), opens new tab, which both fell on solid earnings reports and forecasts after reaching high valuations ahead of the results. Netflix ended down 5% while Amex fell 2.3%.
Still, many investors had high hopes for upcoming earnings and made bullish bets ahead of July equity option expirations, said Bruce Zaro, managing director at Granite Wealth Management in Plymouth, Massachusetts.
"Today's action is all about option expiration as investors make bets on the meat of earnings season, which comes in the next few weeks when all the growth and technology companies report," said Zaro, noting that beyond earnings, investors want to benefit from a strong performance trend in megacap names. "There's a fear of missing out."
On Wall Street the Dow Jones Industrial Average (.DJI), opens new tab fell 142.30 points, or 0.32%, to 44,342.19, the S&P 500 (.SPX), opens new tab fell 0.57 points, or 0.01%, to 6,296.79 and the Nasdaq Composite (.IXIC), opens new tab rose 10.01 points, or 0.05%, to 20,895.66.
For the week, the S&P 500 gained 0.59%, the Nasdaq rose 1.51%, and the Dow fell 0.07%.
MSCI's gauge of stocks across the globe (.MIWD00000PUS), opens new tab rose 1.18 points, or 0.13%, to 927.47, hitting a record high earlier in the day.
Earlier, Europe's STOXX 600 (.STOXX), opens new tab index closed down 0.01%, and was off 0.06% for the week.
In currencies, the U.S. dollar slipped against the euro but was showing a weekly gain, as investors weighed central bank policy amid signs that tariffs may be starting to fuel inflation pressures and as Trump continued to publicly criticize Fed Chair Jerome Powell.
The euro pared some gains after a Financial Times report on a toughening U.S. stance on European import tariffs.
The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, fell 0.05% to 98.46. The euro was last up 0.27% at $1.1626.
Against the Japanese yen , the dollar strengthened 0.09% to 148.73 as polls showed Japanese Prime Minister Shigeru Ishiba's coalition was in danger of losing its majority in an election on Sunday.
In government bonds, U.S. Treasuries prices rose, dragging their yields lower, after comments from Federal Reserve Governor Christopher Waller pushed for a rate cut later this month, while technical buying also contributed to the move higher.
In contrast, most officials who have spoken publicly have indicated a desire to hold rates steady and traders are betting on a 95.3% probability that rates will stay where they are after the month-end meeting, according to CME Group's FedWatch, opens new tab tool.
The yield on benchmark U.S. 10-year notes fell 3.9 basis points to 4.424%, from 4.463% late on Thursday while the 30-year bond yield fell 1.8 basis points to 4.9958% from 5.014%.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 4.4 basis points to 3.873%, from 3.917% late on Thursday.
In commodities, crude oil futures held steady as mixed U.S. economic news offset worries the European Union's latest for its war in Ukraine could reduce oil supplies.
U.S. crude settled down 0.3%, or 20 cents at $67.34 a barrel while Brent ended at $69.28 per barrel, down 0.35% or 24 cents on the day.
Gold prices rose on Friday as a weaker U.S. dollar and ongoing geopolitical and economic uncertainty boosted demand for the safe-haven metal, while platinum prices eased after reaching their highest level since 2014. Spot gold rose 0.33% to $3,349.66 an ounce.
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Elon Musk was in typically combative mood when he declared on his own social media platform, X: 'There is a large graveyard filled with my enemies. I do not wish to add to it, but will if given no choice. Those who challenge me do so at their own peril.' That was in 2023, when Musk could still just about make such statements without triggering an avalanche of contempt. But we are now in 2025 and it's increasingly clear that Musk is going to need a bigger graveyard. The list of his enemies is growing exponentially. Since making that statement, the workaholic Musk has entered into, and fallen spectacularly out of, a political alliance with Donald Trump. This has made him persona non grata for large chunks of the global population, Left and Right, not to mention the man in the White House. Today, millions revel in his misfortune. And the bad news keeps flowing. This month, his artificial intelligence system, Grok, went rogue and started praising Hitler, just weeks after yet another of his spaceships blew up. Reports about his drug use and erratic behaviour proliferate. And various mothers of what he has called his 'legion' of children seem eager to condemn him. Worse, perhaps, his most precious business baby, Tesla, is experiencing deep problems. At the start of this month, the car company, once widely hailed the greatest force for an eco-friendly and sustainable future, reported a sharp plunge in its second quarter sales. Tesla stock has dropped by about 25 per cent this year, partly as result of Trump's international tariff agenda. Sales of the company's new flagship product, its Cybertruck, have tanked. And even Musk's own brother, Kimbal, has sold some $31million of Tesla shares. To make matters more dire, last week a sensational new book containing a multitude of shocking allegations against both Tesla and Musk was published. In The Tesla Files, Sonke Iwersen and Michael Verfurden, two reporters in Germany, have pulled together countless whistleblower testimonies, leaked internal company documents, as well as allegations of corporate malfeasance and terrifying claims of safety issues with Tesla vehicles. Tesla's salesmen like to boast about not spending too much on media messaging. Their amazingly futuristic products do the PR work for them, they say. But Iwersen and Verfurden's work might cause the company to rethink that approach. The authors of The Tesla Files speak to the widows of men who have died in Tesla accidents and never had the cause of the crash adequately explained. They reveal how Tesla's obsession with elegant design, including those sleek retractable handles on the doors of various models, can make it impossible for drivers to be pulled out of the wreckage of their much-loved cars. The most alarming material concerns Tesla's 'autopilot' mode, which is supposed to make cars ever more safe by removing the scope for human error. Leaked documents show thousands of customer complaints, many suggesting that – similar to some genius invention gone horribly wrong in a sci-fi horror film – the technology can cause crashes instead of stopping them. 'Unintentional acceleration', where the computer elects to speed up for no good reason, is one concern. Another is 'phantom braking', when a Tesla dangerously slows down or stops unexpectedly. Given that Teslas can accelerate from 0 to 62mph in 3.8 seconds, and decelerate just as quickly, these phenomena have inevitably led to some extremely dangerous situations. 'After dropping my son off in his school parking lot, as I go to make a right-hand exit it lurches forward suddenly,' said one complainant. 'My autopilot failed/malfunctioned this morning [car didn't brake] and I almost rear-ended somebody at 65mph,' said another. 'Today, while my wife was driving with our baby in the car, it suddenly accelerated out of nowhere,' added a third. Other customers report in the book that their vehicles 'jumped lanes unexpectedly', shoving them into oncoming traffic or concrete road barriers. One 'driver', a physician from California, claims her vehicle steered her directly into a concrete post. '[The post] toppled over but the car didn't stop. I hit the next post. The airbag deployed and I was in shock,' she said. The driverless revolution is well under way in America, and the UK isn't far behind. Here, autopiloted cars are required to have a human behind the wheel, but the Government has sanctioned trials of genuinely driverless cars, which taxi service Uber last month announced it will begin in London next spring. But those stepping into an empty cab only months from now might want to heed the words of tech entrepreneur Vivek Wadhwa. He called himself a 'Tesla fanboy' having bought one after meeting Musk in 2013, and recounts in The Tesla Files how he invited the news channel PBS to experience the wonders of his autopilot system in 2017. As the camera rolled, he found himself having to slam on the brakes as his car sped towards another. 'Elon keeps pushing a lie,' says Wadhwa. 'People are dying because of Tesla's faulty technology.' It's a claim currently being investigated in court as the firm's lawyers defend the role its autopilot system played in a crash that killed a young woman. In 2019, Tesla owner George McGee had the autopilot function of his Tesla Model S activated as he was driving in Key Largo, Florida. Documents filed with the Miami federal court state that he'd lost sight of the road as he bent down to pick up his phone. In that moment, McGee's car allegedly shot through a T-junction at 60mph and crashed into the side of a parked truck. Standing next to the truck was its owner Dillon Angulo, who was seriously injured, and his girlfriend Naibel Benavides Leon, 22, who was flung into nearby trees and died. McGee alleges this was due to a fault with the car's autopilot. In its motion for a summary judgment last month, Tesla argued that the autopilot feature 'did not make the car 'self-driving' and that McGee was aware 'that it was still [his] responsibility to operate the vehicle safely even with autopilot activate'. The publication of Iwersen and Verfurden's book could hardly have come at a worse time for the firm. Tesla will no doubt point to steps it has taken to mitigate problems with unwanted acceration and braking impairing 'safe operation of the vehicle' that one of the car-maker's engineers listed in May 2018. Indeed, a fault-prone radar system was removed and now Tesla's camera-only technology appears to have decreased erroneous speeding episodes. But Iwersen and Verfurden claim that 'phantom braking' incidents have continued to rise. A German automotive technician, Jurgen Zimmermann, suggests that Tesla's video software mistakes shadows or other harmless objects for obstacles, thus triggering the brakes unnecessarily. Furthermore, earlier this year, a study from LendingTree insurance found that Tesla drivers are still involved in more accidents than drivers of any other brand. The rate of Tesla crashes has reportedly increased – to just under 27 accidents per 1,000 drivers, from almost 24 per 1,000 the year before. All car manufacturers have struggled to make autonomous vehicles work perfectly. But no CEO has been more publicly adamant than Elon Musk in insisting that the age of driverless cars is already upon us. 'I really consider autonomous driving a solved problem,' he said in 2016. In 2019, he added that buying anything other than a Tesla would be 'like owning a horse in three years'. But Tesla's head of autopilot software was recently forced to admit in another court case that, in testing, a human driver had to intervene repeatedly to prevent accidents. Since 2024, Tesla has felt compelled to label its autopilot system: 'Full self-driving (supervised)', which is something of a contradiction in terms. 'Do not become complacent,' the company now tells customers, which goes against Musk's vision that Tesla owners should be able to sleep while being whisked to their destination. In the case of Naibel Benavides Leon, Tesla may well cite an October 2024 judgment, in which a California court dismissed a lawsuit accusing Tesla of misleading investors about its autopilot system. 'Justice prevails,' tweeted Musk in triumph. But his company had to rely on what lawyers call the 'puffery defence', the argument that customers should not take marketing claims too literally. As Iwersen and Verfurden put it: 'Like a conductor guiding an orchestra, [Musk] plays with the fantasies of his fans and shareholders. His career is built on making promises about the future... Musk's product is the promise.' This is not to deny that Musk is a truly brilliant innovator or business creator. On the contrary, he is a true disruptor and in many ways a genius. Without him, great strides in electric transportation and space travel would not have been made. It's also worth noting that many of the testimonies in The Tesla Files come from disgruntled ex-employees who clearly resent Musk's 'ultra hardcore' work ethic. Perhaps it is no coincidence that Iwersen and Verfurden work for Handelsblatt, the newspaper of the German business elite, and Musk's Tesla has always been a threat to the leading German manufacturers such as Mercedes, BMW and Volkswagen. But it's also the case that, in building a sort of cult of personality around himself, Musk has managed to distract from the failings of his businesses. The manufacturer has declined to comment on Iwersen and Verfurden's research, and is yet to respond to the Mail's inquiry. For his part, Musk appears to have a semi-messianic faith in himself. He believes that he is improving and protecting humanity for centuries to come, so any misery he may cause in the here and now will be worth the pain. According to this credo, Tesla deaths today can be justified by the future possibility of entirely safe human-error-free transportation. Try telling that to the grieving families of the Tesla drivers who have lost their lives.
