The recent optimism on Wall Street dissipated early Thursday as companies continued to reassess their financial outlooks due to uncertainty over U.S. President Donald Trump's on-again-off-again tariff policies.
Futures for the S&P 500 were down 0.1% before the bell, while futures for the Dow Jones Industrial Average dipped 0.3%. Nasdaq futures were off 0.1%.
Thursday's nominal downturn in markets comes after a two-day rally that was fueled by Trump backing off his criticism of the Federal Reserve and softening his tough talk about trade with China.
PepsiCo fell 1% in the premarket after the beverage and snack maker lowered its full-year earnings expectations, citing increased costs from tariffs and a pullback in consumer spending. A 25% tariff on imported aluminum for cans is among those hitting PepsiCo and other beverage makers.
Southwest Airlines became the latest carrier to pull elements of its profit forecast over uncertainty about the economy. Its shares fell 4% before markets opened. Earlier this month, Delta Air Lines scratched its performance expectations for 2025, citing similar uncertainty over tariffs and consumer spending.
Alphabet, the parent company of Google, reports its latest results after the bell Thursday.
Calling Trump’s policy announcements “headline turbulence,” Tan Jing Yi of the Asia & Oceania Treasury Department at Mizuho Bank warned that global economies could be hurt in the long run, adding, “Sentiments swing from hopes of intense relief to inflicted economic gloom.”
Much of the recent market volatility is because of uncertainty about what Trump will do with his economic policies. Adding to some relief was Trump saying late Tuesday that he has "no intention" to fire the head of the Federal Reserve.
Trump’s tough talk had frightened investors because the Fed is supposed to act independently, without pressure from politicians, so that it can make decisions that may be painful in the short term but are best for the long term.
While a cut to interest rates by the Fed could give the economy a boost, it could also put upward pressure on inflation. Trump also said U.S. tariffs on imports coming from China could come down “substantially” from the current 145%.
“It won’t be that high, not going to be that high,” he said.
Investors are hoping Trump would lower his tariffs after negotiating trade deals with other countries. Trump said this week that he would be "very nice" to the world's second-largest economy and not play hardball with Chinese President Xi Jinping.
"There is an opportunity for a big deal here," U.S. Treasury Secretary Scott Bessent said Wednesday.
France's CAC 40 and the German DAX each shed 0.2% by midday, while Britain's FTSE 100 ticked down 0.1%.
Japan's benchmark Nikkei 225 added 0.5% to finish at 35,039.15. Australia's S&P/ASX 200 rose 0.6% to 7,968.20. South Korea's Kospi lost 0.1% to 2,522.33. Hong Kong's Hang Seng declined 0.7% to 21,909.76, while the Shanghai Composite was little changed, inching up less than 0.1% to 3,297.29.
In energy trading, benchmark U.S. crude rose 74 cents to $63.01 a barrel. Brent crude, the international standard, added 70 cents to $65.88 a barrel.
The U.S. dollar slipped to 142.37 Japanese yen from 143.15 yen. The euro cost $1.1389, up from $1.1322.
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Credit: AP
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Credit: AP