U.S. stocks saw a modest pullback Friday, leading major indexes on Wall Street to close lower for the week after hitting record highs. The S&P 500 fell 0.3%, the Dow Jones dropped 0.6%, and the Nasdaq slipped 0.2%.

President Trump announced plans to raise taxes on imported goods from Canada to 35%, deepening trade tensions. The White House is using tariff threats to secure new trade agreements, with a deadline extended to August 1 for negotiations.

Despite the uncertainty of escalating tariffs, Wall Street remains relatively stable. Market watchers are unsure if Trump will back down on imposing higher tariffs, with the market already pricing in a base case of 10% tariffs.

Earnings season is approaching, with companies like Levi Strauss and PriceSmart beating targets. Big banks like JPMorgan Chase, Wells Fargo, and Citigroup are set to report results next week. Financial and health care sector stocks were the biggest weights on the market Friday.

Shares in aviation company Red Cat Holdings jumped 26.4% after Defense Secretary Pete Hegseth issued orders to ramp up drone production and deployment. Major stock indexes closed lower, with the S&P 500 falling 20.71 points, the Dow dropping 279.13 points, and the Nasdaq slipping 45.14 points.

Bond yields rose, with the 10-year Treasury yield at 4.42%. European stock indexes closed lower, while bitcoin reached a new all-time high of over $118,000. The surge in bitcoin’s price coincides with Nvidia’s valuation hitting $4 trillion and precedes the U.S. Congress’ Crypto Week on July 14.

Read more at Yahoo Finance: S&P 500 and Nasdaq composite pull back from their all-time highs