Although trade tensions continued to concern market participants Thursday morning, corporate earnings appeared to have more sway over sentiment in a development that shows equities may have reached a new equilibrium after strong selling pressure.
On the corporate earnings front, Cisco Systems, Inc. (NASDAQ: CSCO) beat expectations on its top and bottom lines and issued better-than-forecast revenue guidance. The company sees “very minimal impact” from tariffs as it has been working to adjust its supply chain and only about 3% of the company’s revenue comes from the Asian nation. Shares were up more than 3% early Thursday.
Meanwhile, Walmart Inc (NYSE: WMT), up more than 3% in premarket trade Thursday, reported earnings that topped analyst expectations as U.S. same store sales also beat forecasts. The results form a bright spot for the U.S. consumer a day after data showed U.S. retail sales were lower than expected. Walmart also told Reuters that rising tariffs will make goods more expensive for shoppers, but the company says it’s working on ways to mitigate the price rises.
The companies’ comments illustrate how the trade war between the world’s two largest economies is affecting companies and customers, as investors have worried about the spat disrupting supply chains and making goods more expensive, potentially damaging demand.
But this morning, a swing in equity index futures from negative to positive on the good vibes from the earnings illustrates how the market seems to have come to terms with a “new normal” after the United States raised tariffs on $200 billion of Chinese goods, and China, in retaliation, announced increased tariffs on U.S. goods are scheduled to start in June.
Still, it’s arguable that stocks would be poised for larger gains this morning if fresh tensions between the U.S. and China hadn’t surfaced. President Trump signed an executive order saying