S&P 500: US Stocks Slide as Bitcoin Soars, Tariff Threats Fuel Market Volatility

Pre-Opening Stock Market Commentary

Major indices are set to retreat from record highs as President Trump escalates trade battles, with Dow futures dropping 267 points and S&P 500 futures declining 0.5%.

The sell-off comes despite Thursday’s record closes for both the S&P 500 and Nasdaq, as markets digest Trump’s announcement of a 35% tariff on Canadian imports and threats of broader 15-20% blanket tariffs on remaining countries.

Trump’s Tariff Threats: Will the Rally Survive Policy Uncertainty?

Trump’s overnight announcement of a 35% tariff on Canadian goods, citing fentanyl concerns, has rattled markets that previously shrugged off trade tensions.

The president’s escalation to threaten 15-20% blanket tariffs on remaining countries – higher than the 10% standard investors had grown comfortable with – marks a significant policy shift.

The iShares MSCI Canada ETF (EWC) dropped 0.7% in premarket trading, while Canadian stocks including Cameco and TD Bank declined.

Citi’s U.S. equity strategy director Drew Pettit warned that sustained rallies require both resilient macro data and Federal Reserve rate cuts.

“Structurally, we’re not there yet. Fundamentally, I don’t think we’re there yet,” he noted, emphasizing the need for both conditions to support continued sector outperformance.

Bitcoin Breaks $118,000: Which Stocks Are Riding the Wave?

Bitcoin extended its record-breaking rally to top $118,000 for the first time, following the biggest day of ETF inflows in 2025 at $1.18 billion. The flagship cryptocurrency is on pace for nearly 10% gains week-to-date, driving significant moves in related equities.

Coinbase and MicroStrategy are leading the charge, with shares adding 4% and 1.50% respectively in premarket trading.

These stocks have established themselves as primary beneficiaries of bitcoin’s institutional adoption, with MicroStrategy’s aggressive bitcoin accumulation strategy and Coinbase’s position as a leading crypto exchange platform making them key plays for traders seeking exposure to digital asset momentum.

Nvidia Pulls Back: Can Tech Sustain $4 Trillion Valuations?

Nvidia retreated in premarket trading despite its recent surge to a $4 trillion market valuation on AI optimism. The semiconductor giant’s pullback reflects broader tech weakness, with most technology shares declining Friday morning. The stock’s recent gains have been a primary driver of market records, raising questions about sustainability at current valuations.

JPMorgan led banks lower, down approximately 1% in premarket trading, as financial stocks faced pressure from the broader market sell-off. The banking sector’s performance will be crucial to watch as second-quarter earnings season approaches next week.

Earnings Winners and Defense Plays: Where to Find Opportunity

Several individual stocks are bucking the broader market weakness. Levi Strauss surged 7% after beating second-quarter expectations with 22 cents adjusted earnings per share versus 13 cents expected, while raising full-year guidance.

AMC Entertainment popped 7% following Wedbush’s upgrade to outperform, citing a more consistent release slate and completion of major share issuances.

Defense contractors AeroVironment and Kratos Defense & Security both gained over 4% after Defense Secretary Pete Hegseth ordered the Pentagon to fast-track drone production, highlighting potential opportunities in the defense sector.

Market Outlook: Brace for Volatility Ahead

The combination of escalating trade tensions and approaching earnings season suggests increased volatility ahead. With the S&P 500 and Nasdaq at record highs, any disappointment in corporate results or further tariff escalation could trigger significant downside moves.

Traders should monitor key inflation data releases next week alongside earnings reports for directional cues.

Bitcoin’s continued strength provides a bright spot for cryptocurrency-related equities, though the broader market faces headwinds from policy uncertainty and stretched valuations in key sectors.

More Information in our Economic Calendar.