US Trade Sensitivity and Earnings Reports Impact Stocks

US markets are adjusting due to trade uncertainty and earnings updates. Traders watch the Fed while strong ISM services data offers some market support.

Date: 06-05-2025

AI Rating: 5

**Overview**: The stock market is experiencing fluctuations, largely influenced by US trade dynamics and earnings reports from various S&P 500 companies. The recent performance of indexes shows a mixed response in light of potential tariffs and other economic indicators.

**Earnings Per Share (EPS)**: Notably, Tyson Foods downgraded its full-year EPS estimate, projecting it to fall between $7.90 and $8.10, down from previous guidance of $8.15 to $8.35. This downgrade could negatively impact investor sentiment, especially in light of the company's significant share price drop.

**Revenue Growth**: In a more positive light, ON Semiconductor reported better-than-expected Q1 revenue. However, the provided guidance for Q2 adjusted gross margins suggests slight underperformance relative to market expectations. The anticipated gross margins of 36.5% to 38.5% fall short of the consensus forecast of 39%. This could affect revenue growth projections and investor assessments of the company’s trajectory.

**Overall Market Sentiment**: The S&P 500 is adjusting to a lower earnings growth expectation of +6.7% for Q1, significantly revised from November's projections of +11.1%. The present atmosphere of uncertainty surrounding tariffs is adding downward pressure on many sectors, particularly energy and media stocks, which are influenced by the President’s comments regarding foreign tariffs.

The unexpected rise in the April ISM services index, which came in at 51.6, represents a surprising strength in the economy that could maintain investor interest. However, inflation concerns are rising as indicated by the services prices paid sub-index reaching a 2-1/4 year high, further complicating the outlook for stock prices.

Overall, while some sectors appear to be in a weaker position due to external pressures from trade policy and internal revisions to earnings, others may show resilience through earnings beats and economic indicators that signal underlying strength. The emergent landscape will depend significantly on upcoming economic forecasts, interest rate policies, and overall corporate performance.

Stocks: TSN ON AAPL OXY CVX NFLX DIS WBD BRK.B