Businesses continue to trim or withdraw their financial forecasts as they face unpredictable trade policy and cautious consumers.
Boeing shares gained 0.5 per cent after the White House announced that Qatar Airways had inked a $US96 billion ($150 billion) plan to acquire as many as 210 Boeing Co. 787 Dreamliner and 777X aircraft. The White House cast the buy as the largest-ever widebody order and the largest-ever for the 787s.
American Eagle fell 5.7 per cent after the retailer withdrew its financial outlook for the year citing “macro uncertainty.” General Motors, UPS, Kraft Heinz and JetBlue are among the many companies representing a wide range of industries that have warned about the impact of tariffs and a weakening economy.
More than 90 per cent of companies in the S&P 500 have reported earnings for their latest quarter. The majority of companies have reported better-than-expected earnings, but forecasts for earnings growth during the current quarter have been broadly cut in half for companies in the index.
The economy has already showed signs of slowing. It shrank 0.3 per cent during the first quarter amid a surge of imports as businesses and consumers tried to stock up amid tariffs and policy uncertainty.
Inflation remains a big concern. The latest data on consumer prices released Tuesday showed that tariffs haven’t had much impact yet. But that could change as the impact of current tariffs make their way through supply chains and delayed tariffs potentially go into effect. Inflation has cooled to just above the Federal Reserve’s target of 2 per cent, but the threat of higher prices on goods because of import taxes has heightened worries about inflation heating up.
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The US on Thursday will release its April report for inflation at the wholesale level, which is what companies are paying for goods. Economists expect an easing of inflation there.
The latest update Thursday for retail sales is expected to reflect a sharp drop to 0.2 per cent in April from 1.4 per cent the previous month.
Retail giant Walmart will also report its latest financial results on Thursday and its financial forecasts will be closely watched.
In the bond market, Treasury yields edged higher. The yield on the 10-year Treasury rose to 4.52 per cent from 4.47 per cent late Tuesday. The two-year Treasury yield, which moves more closely with expectations for Fed action, rose to 4.04 per cent from 4.00 per cent late Tuesday.
In stock markets abroad, indexes rose in Asia and were mixed in Europe.
AP
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