Weak Corporate Earnings Results Weigh on Stocks

Weak Corporate Earnings Results Weigh on Stocks

  • 21.03.2025 09:06
  • theglobeandmail.com
  • Keywords: Stock Market, Economic Concerns

Stocks dropped as weak corporate earnings and geopolitical tensions weighed on markets. FedEx, Nike, and Micron led declines amid cost pressures and tariffs, while Middle East conflicts added to economic concerns.

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open_in_newOriginal article

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.

Marriott International

Marriott International

Negativesentiment_dissatisfied
Analyst rating: Neutral

Economic concerns weighing on travel stocks.

Carnival

Carnival

Negativesentiment_dissatisfied
Analyst rating: Buy

Economic concerns weighing on travel stocks.

Hilton Worldwide Holdings

Hilton Worldwide Holdings

Negativesentiment_dissatisfied
Analyst rating: Neutral

Economic concerns weighing on travel stocks.

Host Hotels & Resorts

Host Hotels & Resorts

Negativesentiment_dissatisfied
Analyst rating: Buy

Economic concerns weighing on travel stocks.

Delta Air Lines

Delta Air Lines

Negativesentiment_dissatisfied
Analyst rating: Strong buy

Economic concerns weighing on travel stocks.

Norwegian Cruise Line Holdings

Norwegian Cruise Line Holdings

Negativesentiment_dissatisfied
Analyst rating: N/A

Economic concerns weighing on travel stocks.

United Airline Holdings

Negativesentiment_dissatisfied
Analyst rating: N/A

Economic concerns weighing on travel stocks.

Booking Holdings

Booking Holdings

Negativesentiment_dissatisfied
Analyst rating: Buy

Economic concerns weighing on travel stocks.

Lennar Corp

Lennar Corp

Negativesentiment_dissatisfied
Analyst rating: Buy

Reported weaker home sales gross margins and lower Q2 new orders forecast.

Valmont Industries

Negativesentiment_dissatisfied
Analyst rating: N/A

Downgraded by William Blair & Co.

Alnylam Pharmaceuticals

Alnylam Pharmaceuticals

Positivesentiment_satisfied
Analyst rating: Buy

Won expanded approval for its heart drug, Amvuttra.

Tesla

Tesla

Positivesentiment_satisfied
Analyst rating: Neutral

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

Defensive food and beverage producers moving higher due to market weakness.

Molson Coors Beverage

Molson Coors Beverage

Positivesentiment_satisfied
Analyst rating: Neutral

Defensive food and beverage producers moving higher due to market weakness.

Campbell's Company

Campbell's Company

Positivesentiment_satisfied
Analyst rating: Neutral

Defensive food and beverage producers moving higher due to market weakness.

General Mills

General Mills

Positivesentiment_satisfied
Analyst rating: Neutral

Defensive food and beverage producers moving higher due to market weakness.

Kraft Heinz

Kraft Heinz

Positivesentiment_satisfied
Analyst rating: Neutral

Defensive food and beverage producers moving higher due to market weakness.

J M Smucker

Positivesentiment_satisfied
Analyst rating: N/A

Defensive food and beverage producers moving higher due to market weakness.

Lockheed Martin

Lockheed Martin

Positivesentiment_satisfied
Analyst rating: Buy

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

Super Micro Computer

Super Micro Computer

Positivesentiment_satisfied
Analyst rating: Buy

JPMorgan Chase upgraded the stock to neutral from underweight.

Context

Business Insights and Market Implications

Market Performance

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

Key Earnings Pressures

  • FedEx: Down >-11%, cut full-year EPS guidance to $18.00-$18.60 from $19.00-$20.00, citing inflation and demand concerns.
  • Nike: Down >-7%, attributed weaker digital traffic and elevated inventory levels to tariffs and geopolitical tensions.
  • Micron Technology: Down >-7%, forecast Q3 gross margin below consensus at 35.5%-37.5%.

Economic Concerns

  • Weaker-than-expected earnings reports have raised fears over global economic growth.
  • Tariffs imposed by President Trump on Canadian, Mexican, and Chinese goods are expected to impact corporate earnings further.

Geopolitical Risks

  • Escalating tensions in the Middle East (Israel-Hamas conflict, US strikes in Yemen) are adding pressure to markets.
  • Heightened geopolitical risks may lead to increased market volatility.

Central Bank Policies

  • Fed: New York and Chicago Fed Presidents support a steady monetary policy stance.
  • Market Rate Hikes Discounting: 21% chance of a -25bp rate cut after the May FOMC meeting.

Bond Markets

  • US Treasuries: 10-year T-note yield down -1.9bp to 4.218%.
  • European Bonds: German bund yield down -2.7bp, UK gilt yield up +1.1bp.

Stock Movers

Losers

  • Travel Stocks: Marriott (-5%), Carnival (-4%), Hilton (-3%).
  • Homebuilders: Lennar Corp (-4%) due to weaker Q1 margins and Q2 forecasts.
  • Semiconductors: KLA, Applied Materials, AMD, GlobalFoundries, ASML, Lam Research, Marvell Tech, Qualcomm (-2%+).

Gainers

  • Tesla: Up +2%, supported by CEO Musk's assurances to employees.
  • Food & Beverage: Hershey (+1%), Molson Coors (+0.86%), Campbell's (+0.74%).
  • Lockheed Martin: Up +1% on potential fighter jet contract news.

Earnings Reports (3/21/2025)

  • Companies like Carnival, Humacyte, and Transcontinental Realty reported earnings.

Market Volatility

  • Triple-witching event caused higher volume and potential price movements.
  • Options and futures expiration may lead to increased volatility in the short term.

Long-Term Implications

  • Tariffs and geopolitical risks could weaken global trade and corporate profitability.
  • Central bank policies will play a critical role in shaping market sentiment moving forward.