Another relatively quiet trading session ended with stocks generally higher, even as management teams at publicly traded companies continue to reduce and withdraw forward-looking earnings guidance due to uncertainty created by President Donald Trump’s tariffs policy.
Meanwhile, consumer confidence is waning, and employers are becoming more cautious with their hiring plans. Nevertheless, the S&P 500 is now working on a six-day winning streak, as investors, traders and speculators position for positive news from the Trump administration.
The prospect of significantly reduced tariffs on China and other trading partners and the potential for an earlier-than-telegraphed cut to interest rates are the fuel for the bulls right now.
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“Many are still calling for a recession and even lower equity levels,” according to NatAlliance Securities analyst Andrew Brenner. “But we think the ‘Trump put’ is real for equities while the ‘Fed put’ is real for the economy.”
Brenner notes that “tops and bottoms are hard to recognize as they are happening,” but suggests “the worst is behind us.”
After being down as much as 13.8% at one point this month, the S&P 500 is now down only 0.9% in April, and it could manage a monthly gain with a big day tomorrow. And that would have major implications for the rest of the year.
As LPL Financial Chief Equity Strategist Jeff Buchbinder points out, April has been a positive month for stocks 71% of the time since 1950.
“In years when the S&P 500 delivered a positive price return during April,” Buchbinder explains, “the remaining eight months of the year have added an average of 7.4% to seal an average full year advance of 13.5%.”
But, when April ends in the red, “stocks broadly treaded water for the rest of the year, printing just a 0.3% average gain, and shedding 0.2% on average over the full calendar year.”
At the closing bell, the blue-chip Dow Jones Industrial Average was up 0.8% to 40,527, the broad-based S&P 500 had added 0.6% at 5,560, and the tech-heavy Nasdaq Composite was up 0.6% to 17,461.
GM withdraws guidance
Corporate America remains cautious about a future clouded by Trump administration policy choices, reflected in C-suite commentary during recent conference calls as well as their current approach to guidance. Seems Wall Street CEOs are as uncertain as the rest of us right now.
General Motors (GM, -0.7%) withdrew earnings guidance for 2025 and is pausing its $4 billion share-buyback program until it has more clarity on the impact of U.S. tariffs.
“We’re telling folks not to rely on the prior guidance,” said Chief Financial Officer Paul Jacobson during GM’s conference call, “and we’ll update when we have more information around tariffs.”
GM beat on the top and the bottom line, reporting earnings of $2.78 per share on sales of $44 billion vs a Wall Street consensus forecast for $2.68 on sales of $43.2 billion.
Jacobson noted that GM “undoubtedly benefited from some pull-ahead demand from customers purchasing vehicles ahead of potential tariffs.”
JetBlue Airways (JBLU, +2.7%) withdrew its full-year guidance too, joining other airlines hamstrung by the trade war’s impact on travel demand.
Hilton Worldwide Holdings (HLT, +2.1%) and Kraft Heinz (KHC, +0.2%) reduced their full-year forecasts due to growing uncertainty about the U.S. economy, worsening consumer sentiment and the cost of tariffs.
At the same time, Honeywell International (HON, +5.4%) raised its full-year earnings guidance, noting that it will adjust prices and take other actions to mitigate an estimated tariff-related impact of $500 million.
And Royal Caribbean Cruises (RCL, +0.1%) raised its earnings forecast as demand for its particular brand of travel remains solid despite the bigger trends.
Meanwhile, PayPal (PYPL, +2.1%) reaffirmed its guidance after beating expectations for its first-quarter results but did cite “uncertainty in the global macro environment” for not raising its top- and bottom-line forecasts.
Altria Group (MO, +1.0%) also reaffirmed its full-year guidance despite soft sales across its product line.
Confidence is down
The Conference Board said its Consumer Confidence Index declined to 86.0 in April from 93.9 in March, missing a consensus estimate of 87.7 and reaching lows not seen since May 2020.
The Present Situation Index, which is “based on consumers’ assessment of current business and labor market conditions,” declined by 0.9 points to 133.5.
The Expectations Index, which is “based on consumers’ short-term outlook for income, business, and labor market conditions,” declined by 12.5 points to 54.4. That’s the lowest reading for expectations since October 2011.
“This fifth consecutive monthly erosion in confidence marks the longest losing streak since 2008,” notes Barclays analyst Pooja Sriram, “showing how increasingly concerned consumers are becoming about their future.
JOLTS takes a jolt
According to the Bureau of Labor Statistics’s Job Openings and Labor Turnover Survey, job openings declined more than expected to 7.192 million in March from a downwardly revised 7.480 million in February.
“Uncertainty has crimped already-flagging labor demand,” write Wells Fargo economists Sarah House and Nicole Cervi, who note the pullback in openings “was broad-based across industries.”
“Today’s data illustrate a labor market that is treading water in a choppy sea,” House and Cervi observe. “In the Federal Reserve’s latest Beige Book, several employers reported they are pausing or slowing hiring efforts until they have more clarity on the outlook.”
Still, the economists say firms “remain reluctant to let go of existing workers in the event economic conditions prove to be better than expected.”
