Stocks end lower as investors remain jittery over tariffs. Strong earnings lend support
U.S. stocks closed lower, reversing early gains, as investors digested early earnings reports and two back-to-back days of advances made on cautious tariff optimism.
Before the market opened Tuesday, investors saw strong earnings from Bank of America, Citigroup, and Johnson & Johnson, but investors will be most interested in forward guidance and executives' comments for hints on how tariffs might affect companies and their outlooks.
Investors have been trying to be optimistic that President Donald Trump's tariff plan will end up much less aggressive than what he presented on his so-called Liberation Day on April 2. Last week, he exempted for now smartphones, computers and other electronics from a steep reciprocal tariff and on Monday, he floated a temporary exemption for the auto sector to give carmakers time to establish U.S. manufacturing.
However, various people from the Trump administration have also said more tariffs are ahead. Federal Register filings late on Monday also showed the Trump administration was proceeding with probes into imports of pharmaceuticals and semiconductors, as part of a bid to impose tariffs on the sectors.
Investors generally would like to see more narrow, targeted tariffs as positive because those would have a smaller effect on prices and economic growth.
The blue-chip Dow fell 0.39%, or156.07 points, to 40,368.41; the broad S&P 500 dipped 0.17%, or 9.36 points, to 5,396.61; and the tech-heavy Nasdaq slipped 0.06%, or 10.08 points, to 16,821.40. The benchmark 10-year Treasury yield slipped to 4.331%.
A new Fed Chair?
After the market closed on Monday, Treasury Secretary Scott Bessent said in a Bloomberg interview that the Trump administration has already been thinking about who will replace Fed Chair Jerome Powell.
With 13 months until Powell’s term is up, Bessent was asked how the administration thinks about who should lead the Fed. Bessent said “We think about it all of the time. When are we going to start interviewing candidates, that will be sometime in the fall.”
Mike O'Rourke, chief market strategist at JonesTrading, said after Bessent's comments: "After elevating Powell to Fed Chairman in 2018, the President quickly soured on Powell in 2019 and has remained a critic since. Thus, it is not a surprise that the President would plan to replace Chairman Powell at the end of his term, but it is surprising how candid Bessent was."
Corporate news
- Johnson & Johnson beat analysts' estimates in the first three months of the year, but missed estimates for sales of medical devices. It also forecast about $400 million in costs this year related to tariffs on medical devices in a worst-case scenario, said Chief Financial Officer Joseph Wolk in an interview with the Wall Street Journal. The worst-case scenario includes Trump’s 90-day pause, China's retaliatory tariffs and the resumption of the U.S. tariffs.
However, he added “we're able to absorb it and we're going to take the administration at their word that these are part of negotiations. We know things will change, probably by the next quarter's update, but we thought it was prudent to provide that guidance today." Shares of Johnson & Johnson were down fractionally.
- Boeing shares fell 2.39% after a report said China has ordered airlines not to take any further deliveries of the company's jets.
- Bank of America and Citigroup both topped quarterly estimates. Bank of America and Citigroup said consumers continued to spend in the first three months of the year. Shares of Bank of America rose 3.5% and Citigroup gained 1.84%.
- Shares of cloud services company HP Enterprise jumped 5.14% after reports that Elliott Management took a $1.5 billion stake in the company to try to improve shareholder value.
Cryptocurrency
Michael Saylor’s Strategy , formerly MicroStrategy, sold shares last week to buy another $285.8 million of bitcoin, Securities and Exchange Commission filings showed.
The purchase increased the company's holding of the digital asset to around $45 billion, or around 2.5% of all the 21 million in tokens slated to be issued. Strategy is the largest corporate owner of bitcoin.
Bitcoin was last down 0.69% at $84,036.28, down from above $86,000 earlier in the session.
This story was updated with new information.
Medora Lee is a money, markets, and personal finance reporter at Paste BN. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.