Index Rally Pushes on as Earnings Get Underway – US Market Wrap

Wall Street investors weighed the effects of Donald Trump’s trade war on corporate America, sending stocks higher on bets that the Federal Reserve would cut interest rates sooner than expected to avoid a recession.

The S&P 500 rose 2%, reaching its highest level since the day Trump announced his tariff offensive. Despite Beijing’s denial, the president stated that the United States is in talks with China about trade. Alphabet surged in late trading after reporting strong earnings. Intel issued a downbeat forecast. Bond yields fell on speculation that Fed Chair Jerome Powell will be pressured to ease policy if the labour market deteriorates.

In an interview, Fed’s Waller stated that he would support rate cuts if aggressive tariff levels harmed the labour market. Fed Governor Hammack told CNBC that if the central bank has clear evidence of the economy’s direction, it could move on rates as early as June.

As traders waded through the most recent batch of earnings, signs of concern about economic prospects emerged.
American Airlines has withdrawn its full-year earnings forecast, joining a growing number of companies that are hedging their bets on the overall economy. Southwest Airlines’ CEO stated that the US airline industry is already in a recession. PepsiCo and Procter & Gamble have lowered their forecasts.

The looming impact of higher costs from the Trump administration’s trade policy is making it difficult for businesses to forecast how the year will unfold as consumers brace for economic pain.
In another sign of how businesses are becoming more cautious in the face of uncertainty over tariffs and tax policy, data released Thursday showed that orders placed with US factories for business equipment increased only slightly in March.