US stocks sink again as more companies detail damage they're taking
because of Trump's trade war
[May 07, 2025] By
STAN CHOE and ALEX VEIGA
U.S. stocks closed lower Tuesday as quarterly results show more
companies are scrubbing their forecasts for upcoming profits because of
uncertainty created by President Donald Trump’s tariffs.
The S&P 500 fell 0.8%, its second drop after breaking a nine-day winning
streak, its longest such run in more than 20 years. The Dow Jones
Industrial Average dropped 0.9%, and the Nasdaq composite finished 0.9%
lower.
Palantir Technologies was one of the heaviest weights on the market as
it sank 12%. The company, which offers an AI platform for customers,
dropped even though it reported a profit for the latest quarter that met
analysts’ expectations and raised its forecast for revenue over the full
year.
AI-related companies have been finding it more difficult recently to
convince investors to support their stocks after they’ve already shot so
high. Palantir’s stock’s price remains near $110, when it was sitting at
only $20 less than a year ago.
The return to Earth for AI stocks is happening as Trump’s tariffs change
the economic landscape for other companies.
Clorox CEO Linda Rendle said her company saw changes in shopping
behavior during the first three months of the year, for example, that
led to lower revenue. The company reported both weaker revenue and
profit for the latest quarter than analysts expected. Clorox expects the
slowdowns to continue in the current quarter, and its stock fell 2.4%.
Mattel, meanwhile, said it’s “pausing” its financial forecasts for 2025,
in part because the “evolving U.S. tariff landscape” is making it
difficult to predict how much U.S. shoppers will spend over the holiday
season and the rest of this year.
The toymaker closed 2.8% higher after also reporting better results for
the latest quarter than analysts feared.
Ford Motor said it’s expecting to take a $1.5 billion hit this year
because of tariffs. The automaker also said it’s cancelling financial
forecasts for the full year because of “tariff-related uncertainty.” The
stock rose 2.7%.
They’re the latest companies to join a lengthening list that have yanked
their forecasts for the year given uncertainty about what Trump’s
on-again, off-again rollout of tariffs will do to the economy. The hope
is that Trump will relent on some of his tariffs after reaching trade
deals with other countries. Without them, many investors expect the
economy to fall into a recession.
Regardless, all the will-he-won’t-he uncertainty around tariffs has
already made U.S. households more pessimistic about the economy and
could affect their long-term plans for purchases. That uncertainty has
helped fuel a surge in imports ahead of potentially more severe tariffs
ahead.
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Trader Michael Capolino, right, works with colleagues on the floor
of the New York Stock Exchange, Tuesday, May 6, 2025. (AP
Photo/Richard Drew)
 The U.S. trade deficit soared to a
record $140.5 billion in March as consumers and businesses alike
tried to get ahead of tariffs that went into effect in April and
others that have been postponed until July. That follows another
update from last week showing that the U.S. economy shrank at a 0.3%
annual pace during the first quarter of the year because of a surge
in imports.
Some companies say they’re already seeing impacts to their business
from the uncertainty created by tariffs.
Food processing giant Archer Daniels Midland said that operating
profit for agricultural services slumped 31% during its most recent
quarter because of trade policy uncertainty. The stock rose 1.7%.
DoorDash fell 7.4% after reporting weaker revenue than analysts
expected for the latest quarter, though it may have also offered a
more encouraging snapshot of how U.S. households are doing. The
company said order growth in its U.S. marketplace remained healthy
and consistent with average growth over the last year.
All told, the S&P 500 fell 43.47 points to 5,606.91. The Dow dropped
389.83 points to 40,829, and the Nasdaq lost 154.58 points to close
at 17,689.66.
Treasury yields closed broadly lower in the bond market. The yield
on the 10-year Treasury slipped to 4.31% from 4.36% late Monday.
The Federal Reserve is beginning a two-day meeting, and it will
announce its next move on interest rates Wednesday. Virtually no one
expects it to do anything to its main rate, even though Trump has
been advocating for cuts.
“While the possibility still exists for potential rate cuts later
this year, the economic picture is complicated, and it’s too early
to know if or when those cuts might happen,” said Michele Raneri,
vice president and head of U.S. research and consulting at
TransUnion.
Lower interest rates could help goose the economy, but they could
also give inflation more fuel. And worries are already simmering
that Trump’s tariffs could push inflation higher.
Markets were mixed across Europe and Asia. Indexes rose 1.1% in
Shanghai and 0.7% in Hong Kong.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
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