Wall Street holds near record highs as tariffs cloud corporate outlook
The S&P 500 was shaving 0.1% off its all-time high set the day before. The Dow Jones Industrial Average was up 44 points, or 0.1%, as of 12:10 p.m. Eastern time, and the Nasdaq composite was down 0.4% after setting its own record.
General Motors dropped 5.8% despite reporting a stronger profit for the spring than analysts expected. The automaker said it's still expecting a $4 billion to $5 billion hit to its results over 2025 because of tariffs and that it hopes to mitigate 30% of that. GM also said it will feel more pain because of tariffs in the current quarter than it did during the spring.
That helped to offset big gains for some homebuilders after they reported stronger profits for the spring than Wall Street had forecast. D.R. Horton rallied 14.5%, and PulteGroup rose 9.2%. That was even as both companies said homebuyers are continuing to deal with challenging conditions, including higher mortgage rates and an uncertain economy.
So far, the U.S. economy seems to be powering through all the uncertainty created by Trump's on-and-off tariffs. Many of Trump's stiff proposed taxes on imports are currently on pause, and the next big deadline is Aug. 1. Talks are underway on possible trade deals with other countries that could lower the proposed tariffs before they kick in.
Companies are already feeling effects. Genuine Parts, the Atlanta-based company that sells auto and industrial replacement parts around the world, trimmed its profit forecast for the full year in order to incorporate 'all U.S. tariffs currently in effect,' along with its updated expectations for business conditions in the second half of the year.
Its stock rose 5.5% after it reported a stronger profit for the latest quarter than analysts expected.
RTX fell 2.3% after cutting its forecast for profit in 2025 but also raising its forecast for revenue. It made the changes to incorporate what CEO Chris Calio called 'our current assessment of the impact of tariffs,' along with other changes anticipated from Washington's recent approval of big tax changes.
Coca-Cola fell 1% even though it delivered a stronger profit than forecast. Its revenue for the quarter only edged past analysts' expectations, and it said that higher prices that it charged helped offset sales of fewer cases during the spring.
Opendoor Technologies, a company that's caught interest among investors looking for the next 'meme stock' that can rally regardless of how its profits are doing, rose another 3.1% to $3.31. It's more than quadrupled from 78 cents just two Fridays ago.
In the bond market, Treasury yields sank as traders continue to expect the Federal Reserve to wait until September at the earliest to resume cutting interest rates.
Fed Chair Jerome Powell has been insisting he wants to see more data about how Trump's tariffs are affecting inflation and the economy before the Fed makes its next move. That's despite often angry criticism from Trump, who has been lobbying for more cuts to rates to happen sooner.
The yield on the 10-year Treasury eased to 4.33% from 4.38% late Monday.
In overseas markets, Japan's benchmark surged and then fell back as it reopened from a holiday Monday following the ruling coalition's loss of its upper house majority in Sunday's election. The Nikkei 225 shed 0.1%.
Analysts said the market initially climbed on relief that Prime Minister Shigeru Ishiba vowed to stay in office despite a loss for his ruling coalition in an upper-house election Sunday. But the results have only added to political uncertainty and left his government without the heft needed to push through legislation.
A breakthrough in trade talks with the U.S. might win Ishiba a reprieve, but so far there's been scant sign of progress in negotiating away the threat of higher tariffs on Japan's exports to the U.S. beginning Aug. 1.
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