Fed, Tariff Fears Spell Trouble for Stocks. Why Investors Must Hold Their Nerve.

(Michael M. Santiago/Getty Images)

Golf-loving investors tempted to have one of their screens on the Ryder Cup today will need to watch the others like a hawk after a tough few days for the market.

All three major U.S. indexes fell for a third consecutive day Thursday—the first time that’s happened in nearly half a year. They didn’t even have a combined losing streak that long in early April, when the White House’s tariff plans sparked a brutal selloff.

It’s mostly about the Federal Reserve. Strong economic data published on Thursday means policymakers will be in no rush to slash borrowing costs. Friday marks the release of the personal consumption expenditures index, which is the central bank’s preferred measure of inflation.

Wall Street has also sold off some of its favorite tech stocks this week amid questions about how much longer the artificial-intelligence spending boom can last. President Donald Trump’s tariffs on pharmaceuticals and large trucks won’t make the outlook any clearer—although these days, the market seems inclined to shrug off most of his administration’s sweeping levies.

In times like these, the smart move is to hold tight and keep your nerve.

Traders are still betting on further Fed rate cuts in October and December, and earnings season is just around the corner. Although it’s another quarter where Trump’s tariffs could cause some disruption, a solid batch of reports could be just what the market needs to rebound.

While it’s been a below-par week for stocks, investors need to focus on playing the long game.

— George Glover

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New Tariffs on Drugs, Building Materials, and Trucks

President Donald Trump has announced new tariffs on a number of products, including 100% duties on imported pharmaceuticals unless the companies that make them are currently building plants in the U.S.

• The tariffs on imported drugs, certain building materials and furniture, and trucks take effect Oct. 1, less than a week from now, Trump said in a series of social media posts late Thursday.
• The drug levies apply to “any branded or patented” pharmaceutical product unless the company has either broken ground on a U.S. production facility or has one under construction, Trump said. If that is the case, no tariffs will be applied. The post didn’t refer to what authority Trump is using to apply such levies.
• Trump also said the administration would slap 50% tariffs on imported kitchen cabinets, bathroom vanities, and associated products and 30% duties on imported upholstered furniture.

What’s Next: The legal wranglings over the tariffs policy will play out at the Supreme Court in November as it hears arguments from the government which is trying to protect this key strategy.

— Liz Moyer

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Supporters Urge Supreme Court to Keep Fed’s Gov. Cook in Job

Every living former Federal Reserve chair, along with former Treasury Secretaries and White House economic advisors, urged the Supreme Court to block President Donald Trump from firing Fed governor Lisa Cook, warning that her removal would erode public confidence in the Fed’s independence.

• The officials wrote that the Fed’s ability to fight inflation is “directly related not only to its actual insulation from short-term political pressures but also to the public’s perception of its independence,” and that allowing her removal would jeopardize “the credibility and efficacy of U.S. monetary policy.”
• Thursday’s friend-of-court briefing includes signatures by former Fed chairs Alan Greenspan, Ben Bernanke, and Janet Yellen, plus former Treasury secretaries Robert Rubin, Larry Summers, Hank Paulson, Jack Lew, and Tim Geithner. Cook, the first Black woman confirmed to the Fed board, is supposed to serve through 2038.
• Trump dismissed Cook in August, accusing her of alleged misstatements on mortgage documents before her tenure at the Fed. A district court quickly reinstated her, ruling that she had been denied due process, and an appeals court upheld the decision. Cook has denied wrongdoing.
• The government appealed the decision and is asking Supreme Court justices for an emergency order to allow Cook’s removal while litigation proceeds. Cook’s lawyers argued the administration hasn’t provided sufficient evidence warranting a “for cause” dismissal and said removing her from the Fed would disrupt the economy.

What’s Next: The Supreme Court, which has allowed Trump to fire directors at other independent agencies, is expected to rule quickly. Cook’s own lawyers, including former President George W. Bush’s solicitor general Paul Clement, argued Thursday that granting Trump’s request would “eviscerate” Fed independence.

— Nicole Goodkind and Janet H. Cho

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Amazon Settles FTC Lawsuit Over Deceptive Prime Memberships

Amazon Prime customers will be in line for refunds after the e-commerce giant agreed to pay $2.5 billion to settle a 2023 lawsuit filed by the Federal Trade Commission over allegations it tricked customers to sign up for Prime accounts and then made it difficult for them to cancel.

• The settlement, which the FTC called one of the largest in its history, requires that Amazon no longer misrepresent the terms of Prime subscriptions, must clearly disclose all of the terms of subscriptions, and must let users more easily cancel. It includes $1.5 billion for refunds.
• A jury trial in Seattle had started just days ago. “Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers,” Amazon spokesperson Mark Blafkin said. The FTC estimated 35 million people were affected.
• Amazon has 197 million U.S. Prime members, with subscriptions that cost $14.99 a month, or $139 a year. The lawsuit accused Amazon of using deceptive online processes that lured people into automatically-renewing Prime subscriptions and “knowingly” making it complicated to quit.
• The lawsuit was filed by the Biden administration’s FTC Chair Lina Khan, who waged battles with big tech companies over antitrust accusations and calls to strengthen consumer protections. The FTC under the second Trump administration said it is committed to fighting for consumer protections.

What’s Next: In a separate lawsuit also filed two years ago, the FTC and 17 states accuse Amazon of being a “monopolist” and using anticompetitive practices to keep prices high, degrade quality for shoppers, overcharge sellers, and stifle competition. That trial is set to begin in February 2027.

— Angela Palumbo and Janet H. Cho

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Costco Topped Expectations But Same-Store Sales Fall Short

Costco Wholesale topped earnings and revenue expectations in its latest quarter, but investors seemed more focused on lower-than-expected growth in same-store sales, which are below the growth reported one year ago and the second consecutive quarter when that metric has missed the mark for the retailer.

• Same-store sales were up 5.7% from last year, coming in short of forecasts for a 5.9% increase. Overall, Costco reported adjusted earnings of $5.87 a share for the fourth quarter and revenue of $86.2 billion. U.S. same-store sales rose 5.1%.
• Costco is one of the steadiest performers in retail and has been gaining market share at a clip. Its membership income rose 14% from last year. A little under half of that because of last year’s membership fee increase, executives said. Online same-store sales rose 13.6%.
• Gold, jewelry, housewares, and apparel were some of the top online categories, with sales growing by double-digit percentages. The online shopping experience has been updated for several quarters, including changes to search, an online waiting room for highly anticipated product releases, and password-free access to the Costco app.
• Costco’s recent store-hour changes also helped boost sales. Since late June, Costco has allowed its Executive members, who pay double the standard annual fee, to shop an hour before opening time, which has encouraged some members to shift their trips to earlier in the day, according to Placer.ai.

What’s Next: Costco plans to keep growing its presence worldwide. The company opened 27 new warehouses throughout the fiscal year that ended in August, and plans to open another 35 stores in fiscal 2026.

— Sabrina Escobar

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Trump Has Unprecedented Influence Over Companies. Investors See a Boost.

President Donald Trump is exerting an unprecedented amount of influence over companies, and so far those that need something from the White House have found the help comes with strings attached. But at least for most investors, it’s been working out just fine.

• Trump approved Japan-based Nippon Steel’s takeover of U.S. Steel but only with veto power. In September, he nixed a company decision to stop processing at an Illinois U.S. Steel plant, and then U.S. Steel found a way to continue production. Nippon stock is up 10% since June 13.
• Mining companies and their shareholders have benefited the most. The Pentagon took a 15% stake in shares of rare earths miner MP Materials and talks with Canadian miner Lithium Americas are under way. Their stocks are up 156% and 123% since news broke of their Trump deals.
• The government also took a 10% stake in Intel, and its stock is up 24% since that August announcement. Rival chip makers Nvidia and Advanced Micro Devices are paying the U.S. 15% of their revenue from China chip sales after getting clearance to sell there.
• A White House official explained that the administration was hoping to get taxpayers in on some of the benefits to these transactions. “We want to make sure that if we’re intervening to help an American company that we’re doing so in a way that taxpayers can reap the upside.”

What’s Next: The Energy Department is looking to rework a $2.3 billion loan for Lithium Americas. Analysts at National Bank of Canada Financial Markets say the most likely scenario would be warrants issued to the U.S. for 5% to 10% of either the company or its sole project in Nevada.

— Joe Light and Anita Hamilton

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—Newsletter edited by Liz Moyer, Rupert Steiner, Callum Keown