Wall Street drifts as stock markets worldwide take Trump’s new tariffs in stride

Traders work on the floor of the New York Stock Exchange, Friday, Aug. 1, 2025, in New York. (AP Photo/Yuki Iwamura)

NEW YORK — U.S. stocks drifted to a mixed finish on Thursday as U.S. President Donald Trump’s tariffs taking effect on dozens of countries had only a muted effect on markets worldwide.

The S&P 500 slipped 0.1 per cent after briefly climbing to the cusp of its all-time high during the morning. The Dow Jones Industrial Average dropped 224 points, or 0.5 per cent, and the Nasdaq composite rose 0.3 per cent to a record.

Worries are high that Trump’s tariffs are damaging the economy, particularly after last week’s worse-than-expected report on the job market. But hopes for coming cuts to interest rates by the Federal Reserve and a torrent of stronger-than-expected profit reports from big U.S. companies are helping to offset the concerns, at least for now.

Lower interest rates can give the economy and investment prices a boost, though the downside is that they can also push inflation higher. The Bank of England cut its main interest rate on Thursday in hopes of bolstering the sluggish U.K. economy.

The U.S. tariffs that took effect Thursday morning were already well known, as well as lower than what Trump had initially threatened.

Some countries are still trying to negotiate down the tax rates on their exports, and continued uncertainty seems to be the only certainty on Wall Street. All the while, the U.S. stock market faces criticism that it’s climbed too far, too fast since hitting a bottom in April, with prices looking too expensive.

On Wall Street, worries about tariffs helped drag down the stock of Crocs.

The footwear maker tumbled 29.2 per cent even though it reported a stronger profit for the latest quarter than analysts expected. It said it expects revenue to drop as much as 11 per cent in the current quarter from a year earlier, while tariffs are dragging on its profitability. The company cited “continued uncertainty from evolving global trade policy and related pressures around the consumer.”

Eli Lilly dropped 14.1 per cent even though the drugmaker likewise reported a stronger profit for the latest quarter than analysts expected. Analysts said some investors were disappointed with results that Lilly provided for a late-stage study of its potential pill version of the popular weight-loss drug Zepbound.

Intel sank 3.1 per cent after Trump called for its CEO to resign, while accusing him of being “highly CONFLICTED,” though he gave no evidence.

Apple helped keep the market’s losses in check, as it rose on hopes that its massive size can help it navigate Trump’s economy. Its stock climbed 3.2 per cent after CEO Tim Cook joined Trump at the White House on Wednesday to say it’s increasing its investment in U.S. manufacturing by an additional US$100 billion over the next four years.

Trump also announced a 100 per cent tariff on imported computer chips, but he added “if you’re building in the United States of America, there’s no charge.”

“Large, cash-rich companies that can afford to build in America will be the ones to benefit the most,” said Brian Jacobsen, chief economist at Annex Wealth Management. “It’s survival of the biggest.”

DoorDash added five per cent after the delivery app topped Wall Street’s profit expectations for the latest quarter. It attracted new customers and saw the total number of orders increase.

Duolingo, the language-learning app, jumped 13.7 per cent after it crushed Wall Street’s expectations. The company said its subscription revenue grew 46 per cent over the same period last year.

All told the S&P 500 edged down by 5.06 points to 6,340.00. The Dow Jones Industrial Average dipped 224.48 to 43,968.64, and the Nasdaq composite rose 73.27 to 21,242.70.

In stock markets abroad, indexes rose across much of Europe and Asia.

Stocks climbed 0.2 per cent in Shanghai and 0.7 per cent in Hong Kong after China reported that its exports picked up in July, helped by a flurry of shipments as businesses took advantage of a pause in Trump’s tariff war with Beijing.

Japan’s Nikkei 225 rose 0.6 per cent. Toyota Motor’s stock fell after it cut its full-year earnings forecasts largely because of Trump’s tariffs, but Sony rose after the entertainment and electronics company indicated it’s taking less damage from the tariffs than it had expected.

In the bond market, the yield on the 10-year Treasury rose to 4.23 per cent from 4.22 per cent late Wednesday after the latest reports on the U.S. economy came in mixed.

One said that slightly more U.S. workers applied for unemployment benefits last week. That could be an indication of rising layoffs, but the number remains within its recent range.

“There is nothing to see here!” according to Carl Weinberg, chief economist at High Frequency Economics. “These are not nearly recession readings.”

A separate report said that productivity for U.S. workers improved by more during the spring than economists expected.

That could help the U.S. economy grow without adding more pressure on inflation. And that’s particularly important when Trump’s tariffs look set to increase prices for all kinds of things that U.S. households and businesses buy.

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Stan Choe, The Associated Press

AP business writers Teresa Cerojano and Matt Ott contributed.