US Stocks Rise as Markets Digest Earnings, Tariffs and Trade Deal

Today, we enter the last day of what has been a rather turbulent month in the financial markets. Despite starting quite poorly for Wall Street, US stocks have staged a recovery in recent sessions. Let’s look at this, and other news, in more detail.

Lutnick Teases Trade Deal

The S&P 500 and the Dow Jones both rose for the sixth consecutive session yesterday, closing with gains of 0.6% and 0.8% respectively. The Nasdaq Composite also posted a gain of 0.6% in Tuesday’s session.

Consequently, as things stand, the S&P 500 and Dow Jones are down by 0.9% and 3.5% respectively in April. The Nasdaq is currently up by 0.9% for the month. That's not a bad turnaround considering all three indices were down more than 10% at one point.

Yesterday’s gains on Wall Street came after US Commerce Secretary Howard Lutnick said that the Trump administration is very close to its first trade deal but fell short of naming the country involved.

“I have a deal done, done, done, done, but I need to wait for their prime minister and their parliament to give its approval, which I expect shortly” Lutnick told CNBC on Tuesday.

Auto Tariff Reprieve

Tariffs have been firmly in the spotlight this month, as Washington keeps everyone guessing in terms of its trade policy.

Yesterday, US President Donald Trump officially softened auto tariffs for some of the world’s largest car makers. The move will provide relief to auto manufacturers through a mixture of tariff exemptions and rebates to offset other levies.

The move came after warnings that tariffs would raise prices, reduce sales and make US production less competitive globally.

US Consumer Confidence Falls, Again

Yesterday, the Conference Board announced that its consumer confidence index, which measures the level of consumer confidence in economic activity, fell for the fifth consecutive month in April.

This latest drop takes the index to its lowest level in five years as uncertainty surrounding the impact of Washington’s tariff policy negatively impacts consumer sentiment.

The same survey also showed that recession expectations amongst consumers hit a two-year high.

Later today, the US Bureau of Economic Analysis will report Gross Domestic Product (GDP) data for the first quarter of the year. Economists are expecting a significant slowdown in the first three months of the year.

China Manufacturing Decline

China’s manufacturing activity contracted in April, as an escalating trade war with the US starts to take its toll. 

The Purchasing Managers’ Index, an important measure of industrial output, fell by more than expected to 49.0 in April, its lowest reading since December 2023. A reading of below 50 implies contraction.  

China’s National Bureau of Statistics said the decline was partly driven by “sharp changes in the external environment”, adding that there are “no winners in trade wars”. 

Zichun Huang, China economist at Capital Economics, noted that “The sharp drop in the PMIs likely overstates the impact of tariffs due to negative sentiment effects, but it still suggests that China’s economy is coming under pressure as external demand cools”. 

Earnings Watch

Yesterday saw a number of big names announce their latest quarterly results. Let’s take a look at couple of these in more detail. 

Visa

Visa reported quarterly earnings which beat analyst expectations and announced a new $30 billion stock buyback program. 

Revenue grew 9% year on year to $9.6 billion, whilst adjusted earnings per share (EPS) rose 10% to $2.76. Analysts had expected these numbers to come in at $9.55 billion and $2.68 respectively. 

Payments volume rose 8% during the quarter, with CEO Ryan McInerney remarking that “consumer spending remained resilient, even with macroeconomic uncertainty”.

Nevertheless, if current economic uncertainty continues in the US, Visa could begin to feel the effects of lower consumer sentiment in the world’s largest economy.

Coca-Cola

US beverage giant Coca-Cola also announced quarterly earnings yesterday.

Revenue in Q1 dropped by 2% to $11.13 billion, which slightly missed analyst expectations of $11.14 billion. On the other hand, adjusted EPS rose 1% to $0.73, just beating analyst expectations of $0.71.

Although Coca-Cola left its full-year guidance for organic revenue and adjusted EPS unchanged, CEO James Quincey noted that “volume was impacted by weakening consumer sentiment as the quarter progressed”.

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