The S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) opened Friday’s trading session deep in the red. Both ETFs rallied later in the day, with QQQ closing in the green and SPY finishing just below breakeven.
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Trade deals are back in the spotlight, with the U.S. announcing agreements with Switzerland, Liechtenstein, El Salvador, Argentina, Ecuador, and Guatemala. Switzerland and Liechtenstein will see their tariff rates slashed to 15%. In return, Switzerland and Liechtenstein have agreed to invest $200 billion and $300 million, respectively, into the U.S. over the next five years, among other terms. President Trump enacted a 39% tariff rate on Switzerland in August, the highest of any developed nation.
The trade deals with the four Latin American countries are set to lower grocery prices for U.S. consumers, with Trump scheduled to sign an executive order later today that would reduce tariffs on food items like coffee, bananas, beef, and tomatoes. The four countries have also agreed to lower tariff barriers on some U.S. exports, including products in the agriculture, medical, and chemical sectors.
Meanwhile, the odds of a 25 bps rate cut during the December 9-10 Federal Open Market Committee (FOMC) meeting have dropped to 45.9% from 66.9% over the past week after several Fed officials voiced concerns about inflation. The lower odds come amid an economic data blackout caused by the government shutdown, although the Bureau of Labor Statistics (BLS) announced that it would release September’s jobs report, which includes nonfarm payrolls and the unemployment rate, on November 20 at 8:30 a.m. Eastern Time.
On Friday, Kansas City Fed President Jeff Schmid pointed out that other factors besides tariffs could be responsible for higher prices, such as electricity and healthcare costs. He also said that rate cuts, which typically benefit employment by making it cheaper for businesses to borrow capital, may not improve the labor market this time due to structural changes.
“I do not think further cuts in interest rates will do much to patch over any cracks in the labor market — stresses that more likely than not arise from structural changes in technology and immigration policy,” said Schmid on Friday.
The S&P 500 (SPX) closed with a 0.05% loss, while the Nasdaq 100 (NDX) returned 0.06%.
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