S&P 500 Faces Pressure from Weak Earnings and Trade Concerns

Market struggles continue as stocks are pressured by disappointing earnings reports from major companies. Alphabet and AMD lead losses, which might weigh down investor sentiment in the near future.

Date: 06-02-2025

AI Rating: 4

Market Performance Overview

The S&P 500 Index has seen a decrease of -0.20%, reflecting a broader trend of weakness among major stock indexes. This decline is influenced by disappointing earnings results from key technology companies, particularly Alphabet and Advanced Micro Devices.

Key Earnings Reports

Alphabet's stock fell over -8% following its Q4 revenue report of $81.62 billion, which was below the consensus expectation of $82.82 billion. Similarly, Advanced Micro Devices experienced a downturn of more than -10% after reporting Q4 data center revenue of $3.86 billion, also failing to meet the consensus estimate of $4.09 billion.

Additionally, FMC Corporation reported a dismal forecast for 2025 adjusted EPS at $3.26-$3.70, which is significantly lower than the consensus of $4.40. This has led to a sharp decline of more than -33% in its stock price, indicating a strong negative reaction from investors.

On the contrary, some companies reported positive earnings that might have a favorable impact. For instance, Mattel's Q4 net sales of $1.65 billion exceeded the consensus of $1.63 billion, leading its stock to rise by +12%. Johnson Controls also improved its earnings forecast, driving its stock up by +11%.

Impact of Trade Relations

The ongoing concerns regarding US-China trade relations also contribute to the market's volatility. Apple's stock dropped over -1% following news of a potential antitrust probe by China's regulators. In addition, recent tariffs imposed by the US and subsequent retaliation from China have created uncertainty that affects investor confidence.

Earnings Growth Expectations

Despite the current challenges, analysts estimate that S&P 500 earnings grew by +7.5% year-over-year in Q4, the second-highest forecast seen over the past three years. This could suggest potential resilience in the earnings landscape ahead.

In summary, while certain stocks like Alphabet and AMD face significant declines due to disappointing earnings, the overall earnings growth expectation remains positive. Trade tensions and the resultant impact on major tech stocks will likely continue to influence market sentiment in the near term.

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