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Weak Corporate Earnings Results Weigh on Stocks

Weak Corporate Earnings Results Weigh on Stocks

  • 21.03.2025 14:06
  • theglobeandmail.com
  • Keywords: success, success

Stocks dropped due to weaker-than-expected corporate earnings, with FedEx, Nike, and Micron leading declines. Concerns over US tariffs and global economic outlook weighed on investor sentiment, despite Federal Reserve officials signaling steady policy.

SMCI ProductsFDXsentiment_dissatisfiedNKEsentiment_dissatisfiedMUsentiment_dissatisfiedALNYsentiment_satisfiedTSLAsentiment_satisfiedHSYsentiment_satisfiedTAPsentiment_satisfiedCPBsentiment_satisfiedGISsentiment_satisfiedKHCsentiment_satisfiedLMTsentiment_satisfiedSMCIsentiment_satisfied

Estimated market influence

FedEx

FedEx

Negativesentiment_dissatisfied
Analyst rating: Buy

Cut profit outlook due to cost pressures and weaker demand.

Nike

Nike

Negativesentiment_dissatisfied
Analyst rating: Buy

Blaming tariffs and geopolitics for earnings woes.

Micron Technology

Micron Technology

Negativesentiment_dissatisfied
Analyst rating: Buy

Forecasting Q3 adjusted gross margin below consensus.

Alnylam Pharmaceuticals

Alnylam Pharmaceuticals

Positivesentiment_satisfied
Analyst rating: Buy

Won expanded approval for its heart drug, Amvuttra.

Tesla

Tesla

Positivesentiment_satisfied
Analyst rating: Neutral

Up more than +2% after CEO Musk assured employees to weather the storm and hang on to their stock after its recent 50% plunge.

Hershey Co

Hershey Co

Positivesentiment_satisfied
Analyst rating: Neutral

Moving higher due to weakness in broader market, up more than +1%.

Molson Coors Beverage

Molson Coors Beverage

Positivesentiment_satisfied
Analyst rating: Neutral

Up +0.86% as defensive food and beverage producers move higher.

Campbell's Company

Campbell's Company

Positivesentiment_satisfied
Analyst rating: Neutral

Up +0.74% due to market weakness.

General Mills

General Mills

Positivesentiment_satisfied
Analyst rating: Neutral

Up +0.73% as defensive food and beverage producers move higher.

Kraft Heinz

Kraft Heinz

Positivesentiment_satisfied
Analyst rating: Neutral

Up +0.72% due to market weakness.

J M Smucker

Positivesentiment_satisfied
Analyst rating: N/A

Up +0.70% as defensive food and beverage producers move higher.

Lockheed Martin

Lockheed Martin

Positivesentiment_satisfied
Analyst rating: Buy

Up more than +1% after Bloomberg reported the White House is poised to announce the winner of its contest to build the next-generation fighter jet.

Super Micro Computer

Super Micro Computer

Positivesentiment_satisfied
Analyst rating: Buy

Up more than +1% after JPMorgan Chase upgraded the stock to neutral from underweight.

Context

Analysis of Market Trends and Business Insights

Overall Market Performance

  • S&P 500 Index: Down -0.81%
  • Dow Jones Industrials Index: Down -0.95%
  • Nasdaq 100 Index: Down -0.97%

Key Stock Movers and Earnings Concerns

  • FedEx (FEDX):
    • Down more than -11%.
    • Cut full-year adjusted EPS forecast to $18.00-$18.60 from $19.00-$20.00, below consensus of $18.95.
  • Nike (NKE):
    • Down more than -7%.
    • Cited digital traffic decline and inventory issues due to tariffs.
  • Micron Technology (MU):
    • Down more than -7%.
    • Forecasted Q3 adjusted gross margin of 35.5%-37.5%, midpoint below consensus of 37.4%.

Economic and Geopolitical Factors

  • Global Tariffs:
    • US tariffs on Canadian, Mexican, and Chinese goods expected to weaken economic growth and corporate earnings.
    • Reciprocal tariffs deadline set for April 2 by President Trump.
  • Geopolitical Risks:
    • Middle East tensions escalated with Israeli airstrikes in Gaza and US strikes in Yemen.
    • Heightened risks negatively impacting market sentiment.

Interest Rates and Bond Markets

  • 10-year T-note yield: Down -1.9 bp to 4.218%.
  • European bond yields:
    • 10-year German bund yield: Down -2.7 bp to 2.753%.
    • 10-year UK gilt yield: Up +1.1 bp to 4.656%.

Federal Reserve Policy

  • New York Fed President Williams: Supports current monetary policy stance.
  • Chicago Fed President Goolsbee: Advocates for steady Fed policy and long-term perspective.

Market Volatility

  • Triple-Witching Event: Caused higher volume and potential price movements due to $4.5 trillion in expiring contracts.
  • Market Sentiment: Concerns over global economic outlook and trade policies leading to market weakness.

Defensive Sectors Outperforming

  • Food and Beverage:
    • Hershey Co (+1%), Molson Coors Beverage (+0.86%), Campbell's Company (+0.74%).
  • Healthcare:
    • Alnylam Pharmaceuticals (+10%) after drug approval expansion.

Industrial and Technology Sectors

  • Lockheed Martin (LMT): Up +1% on potential fighter jet contract news.
  • Super Micro Computer (SMCI): Up +1% after JPMorgan upgrade.

Long-Term Implications

  • Global Trade Policy: Tariffs may reduce corporate earnings and economic growth.
  • Geopolitical Risks: Escalating conflicts could increase market volatility.
  • Federal Reserve Action: Markets discounting a 25 bp rate cut at 21% probability post-FOMC meeting.

Conclusion

The current market weakness reflects broader economic concerns, geopolitical tensions, and the impact of trade policies. Companies are grappling with cost pressures, demand decline, and inventory issues. The Fed's cautious stance suggests no immediate relief for markets, while defensive sectors offer relative stability in uncertain times.