Wall Street ends lower as investors consider tariff impact on results, economy
The U.S. trade deficit narrowed in June on a sharp drop in consumer goods imports, and the trade gap with China shrank to its lowest in more than 21 years.
In addition, a measure of activity in the U.S. services sector hit stall-speed in July, with businesses saying new import taxes are pushing costs higher.
Shares of KFC parent Yum Brands (YUM.N), opens new tab fell 5.1% after the company missed estimates for the second quarter, as steep trade duties restricted consumer spending.
Caterpillar (CAT.N), opens new tab warned U.S. tariffs would pose significant challenges in the second half of the year and cost it up to $1.5 billion in 2025, but its shares ended up 0.1%.
The comments come at the tail end of the U.S. second-quarter earnings season, in which about 80% of reports from S&P 500 companies are beating analyst profit expectations.
"If you look at results, they are trending above low-bar expectations," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis, Minnesota.
"The impact of tariffs remains a work in progress. We're not seeing any meaningful impact on company profitability with tariffs. We do know, however, that they loom."
The Dow Jones Industrial Average (.DJI), opens new tab fell 61.90 points, or 0.14%, to 44,111.74, the S&P 500 (.SPX), opens new tab lost 30.75 points, or 0.49%, to 6,299.19 and the Nasdaq Composite (.IXIC), opens new tab lost 137.03 points, or 0.65%, to 20,916.55.
Trump on Tuesday said the U.S. could impose a "small tariff" on pharmaceutical imports before increasing the rate subsequently. He also signaled an announcement on tariffs on semiconductors and chips in the "next week or so."
"Today's market action reflects investors that are merely in pause mode," Sandven said, noting that the backdrop for equities remains constructive for the year.
The S&P 500 and Nasdaq hit a string of record highs recently, and the S&P 500 remains up 7.1% for the year so far.
In other results-related news, Marriott International (MAR.O), opens new tab cut its full-year forecast for revenue growth and profit and signaled slowing travel demand and economic uncertainties. Its stock closed up 0.2%.
While the earnings period is winding down, investors look forward to more key results on Wednesday, with both Walt Disney (DIS.N), opens new tab and McDonald's (MCD.N), opens new tab due to report.
Advancing issues outnumbered decliners by a 1.27-to-1 ratio on the NYSE. There were 158 new highs and 67 new lows on the NYSE.
On the Nasdaq, 2,216 stocks rose and 2,365 fell as declining issues outnumbered advancers by a 1.07-to-1 ratio.
Volume on U.S. exchanges was 16.29 billion shares, compared with the roughly 18.33 billion average for the full session over the last 20 trading days.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Independent
24 minutes ago
- The Independent
Here's what you need to know about ESPN's new steaming service and its deals with the NFL and WWE
ESPN 's much-discussed streaming service finally has its launch date. The network announced Wednesday that its direct-to-consumer service and enhanced app will debut Aug. 21. The announcement coincided with Disney's quarterly earning report. This week's expanded deals with the NFL and a new partnership with WWE provides ESPN the more inventory and offerings, which it hopes will bolster the company in a landscape that is divided among cable, satellite and streaming. Will the ESPN service result in more subscribers? According to Nielsen, streaming usage surpassed broadcast and cable combined in U.S. television usage for the first time. Streaming was at 44.8% compared to linear's 44.2%. When Nielsen started keeping track in May 2021 linear was at 64% compared to streaming's 26%. The ESPN DTC will start out with around 25 million subscribers as those currently getting ESPN+ will migrate to the new platform. Many of those though are cable and satellite subscribers who get the service through deals with their provider. ESPN is hoping that more cord cutters will pay up to $29.95 per month since it will offer all the ESPN networks — ESPN, ESPN2, ESPNU, SECN, ACCN, ESPNEWS, ESPN Deportes, ESPN on ABC, ESPN+, ESPN3, SECN+ and ACCNX — as well as being able to bundle NFL Network and NFL RedZone through a deal with NFL+ Premium. Trying to determine how many of the DTC service subscribers are cord cutters will be more difficult though. Disney announced during its earnings call Wednesday that it will stop releasing ESPN streaming subscriber metrics beginning next quarter. ESPN was in nearly 100 million households in 2013. Over the past 12 years due to cord cutting and streaming, that number has dropped to 60 million. Over the next two years, that is expected to decrease to fewer than 50 million. What do the NFL and WWE deals mean for ESPN's market footprint? Live sports remains valuable property, but the NFL is the beachfront house. For taking over NFL Network, which had also been steadily losing subscribers, ESPN gets three additional NFL games along with another outlet to air Monday night games when there are more than one, as well as the ability for its app users to get specialty highlights of their favorite players or teams. There will also be ways to access stats, betting and fantasy sports info on the app while watching games. The WWE premium live events (they're no longer called pay-per-views) also makes sense when ESPN takes over from Peacock next year. After all, the E in ESPN stands for entertainment. As Netflix chief content officer Bela Bajaria pointed out when it started carrying 'Monday Night Raw' earlier this year, the WWE has a multigenerational and loyal fan base that will flock to whoever carries the events. The WWE deal applies only to the U.S. though. Netflix has the rights for overseas. Can all of this turn around ESPN's financial outlook? It does carry some risks. ESPN had $4.3 billion in revenue last quarter, an increase of 1% from last year, but the operating profit decreased 7% to $1 billion due to increased rights fees. It is paying the NFL an average of $2.7 billion per year while the NBA 11-year deal that begins this upcoming season averages $2.6 billion per year. The five-year WWE deal will average $325 million per year. This also comes at a time when the network opted out of its $550 million contract with Major League Baseball beginning next year and appears to be out of the running for Formula One rights. ESPN pays $75 million to $90 million per year under its three-year deal, but Liberty Media, which owns F1, is seeking at least $120 million for the next contract, which begins in 2026. ESPN needs more than cable and satellite subscriber affiliate fees, which is also why it is launching a DTC product to gain more revenue. The past two years, it was been involved in prolonged negotiations with DirecTV and Spectrum before reaching deals. How can viewers get the ESPN streaming service? If cable and satellite subscribers already get ESPN+, they will automatically migrate to the new service. For cord cutters, there is an offer where they can get the ESPN unlimited plan with Disney+ and Hulu for $29.99/month for the first 12 months. ___
Reuters
25 minutes ago
- Reuters
Germany's auto association says EU-US trade deal must take effect now
BERLIN, Aug 7 (Reuters) - Germany's VDA auto association said on Thursday that the promised trade agreement between the EU and the United States needed to be implemented now so the industry could receive some relief. Sectoral tariffs of 27.5% "remain in place and place a significant burden on German automakers and automotive suppliers, as well as on transatlantic trade," said VDA President Hildegard Mueller in a press release. The EU Commission and German government must vigorously advocate for the U.S. to withdraw sectoral tariffs, she said. A source familiar with the EU-U.S. negotiations had said on Wednesday that the EU will likely have to wait a few more days for an executive order by U.S. President Donald Trump.
Reuters
25 minutes ago
- Reuters
Airbnb dips as slower growth outlook renews fears of travel demand slowdown
Aug 7 (Reuters) - Shares of Airbnb (ABNB.O), opens new tab slumped 6% before the bell on Thursday after the company forecast slower growth in the second half of the year, disappointing investors of the sector expecting a rebound in travel demand after strong outlooks from major travel firms. The vacation home rental's gloomy outlook came as setback to the industry, which saw a rebound in consumer sentiment in July, and was expecting budget-conscious Americans to return to vacations despite tariffs and inflation. United Airlines (UAL.O), opens new tab and Hilton Worldwide (HLT.N), opens new tab last month forecast an uptick in bookings and strong fourth-quarter revenue growth. Last week, online travel agency Booking Holdings (BKNG.O), opens new tab also posted upbeat quarterly results. "The company (Airbnb) sees tariffs having an impact on margins in the third quarter, with the initial tariffs shock in April leading to a big drop in bookings," said Danni Hewson, head of financial analysis at AJ Bell. Investors will now focus on results from Expedia Group (EXPE.O), opens new tab, due after the bell, to better gauge the health of the travel industry in the United States. Airbnb attributed its weak growth outlook to tough comparisons with the year-ago period, when strong bookings in Asia and Latin America had helped earnings. The company expects night bookings growth to moderate year-over-year going into the fourth quarter. It expects the implied take rate, or the ratio of revenue to gross bookings, to remain flat in the third quarter. So far this year, Airbnb and Expedia shares have both fallen 0.6% each compared with an 11.4% rise in Booking Holdings during the same period. Airbnb commands a higher forward price-to-earnings multiple of 28.41, compared with Booking that's trading at a more modest 22.69 and Expedia at 11.57.
