Block shares tumble after 2025 profit forecast cut
May 2 (Reuters) - Block's (XYZ.N), opens new tab shares fell 22% on Friday, hitting their lowest since November 2023 after the payments firm cut its profit forecast for the year.
At least eight brokerages reduced their price targets on the stock, citing softness at the company's peer-to-peer Cash App and mounting competitive pressures.
The stock was last trading at $45.71.
Block's forecast cut comes amid a delicate time for the economy, with uncertainty sparked by President Donald Trump's tariffs raising fears of a slowdown in consumer spending.
Data released earlier this week also showed the U.S. economy had contracted in the first quarter, potentially weakening sentiment further.
After market close on Thursday, Jack Dorsey-led Block lowered its forecast for 2025 gross profit growth to 12% from 15%, while projecting second-quarter gross profit at $2.45 billion which was below Wall Street estimates of $2.54 billion.
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Reuters
an hour ago
- Reuters
TRADING DAY Good vibrations turn sour
ORLANDO, Florida, June 11 (Reuters) - TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist I'm excited to announce that I'm now part of Reuters Open Interest (ROI), an essential new source for data-driven, expert commentary on market and economic trends. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X. The US and China have reached a trade deal, or at least agreed on the framework of a deal, which together with surprisingly soft U.S. inflation data, gave markets a lift on Wednesday. But Wall Street's gains were mild, and they were later wiped out by rising tensions in the Middle East. In my column today I look at the 'equity risk premium' and other metrics that suggest relative U.S. equity and bond valuations are getting very stretched. More on that below, but first, a roundup of the main market moves. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves Good vibrations turn sour It's a "done" deal, according to U.S. President Donald Trump, although the he and Chinese leader Xi Jinping still have to finalize the wording of the trade agreement between the two superpowers and sign off on it. The main points of the deal appear to be: China will remove export restrictions on rare earth minerals and other key industrial components; U.S. tariffs on Chinese goods will total 55%; Chinese tariffs on U.S. goods will total 10%. Trump could not have been more enthusiastic in his praise for the agreement on Wednesday, and Commerce Secretary Howard Lutnick said 'deal after deal' with other countries will follow in the weeks ahead. Yet, judging by the relatively muted market reaction, investors are less enthused. And given the chaotic and unpredictable nature of the Trump administration's tariff announcements thus far, the irony of Treasury Secretary Scott Bessent calling on China to be a "reliable partner" in trade negotiations will not be lost on some observers. Especially, one suspects, in Beijing. Based on these proposed China levies, and with the US expected to conclude more trade deals in the coming weeks, the overall U.S. effective tariff rate will be lower than feared a couple of months ago. That's a relief. But the effective tariff rate of around 15% that many economists expect will still be significantly higher than the 2.5% rate at the end of last year, and would be the highest since the 1930s. Also, as the May inflation figures showed, tariffs have yet to be felt on prices. Investors - and Fed policymakers, who meet next week - are in a state of limbo. How will corporate profits and consumer spending be affected? What proportion of the tariffs will companies "swallow", and how much will they pass on to their customers? Zooming out, inflation appears to be cooling around the world, although this trend is expected to reverse once tariffs start to fuel higher goods price inflation. Figures on Wednesday showed that U.S. consumer inflation and Japanese wholesale inflation were lower than expected in May. These reports follow similar numbers from Europe recently, and China remains stuck in its battle against deflation. Next up is India, which releases consumer inflation figures on Thursday, which are expected to show annual inflation slowed to 3.0% in May, the lowest in more than six years. Another focus for investors on Thursday will be the auction of 30-year U.S. Treasury bonds. US stocks-bonds warnings flash amber again Calm has descended on U.S. markets following the 'Liberation Day' tariff turmoil of early April. But Wall Street's rally has revived questions about U.S. equity valuations, as stocks once again look super pricey compared to bonds. Since the chaotic days of early April, U.S. equities have rebounded fiercely, with the S&P 500 up 25%, putting the Shiller cyclically adjusted price-earnings (CAPE) ratio for the index in the 94th percentile going back to the 1950s, according to bond giant PIMCO. Stocks are looking expensive in absolute terms, and in relation to bonds. The equity risk premium (ERP), the difference between equity yields and bond yields, is near historically low levels. According to analysts at PIMCO, the ERP is now zero. The previous two times it fell to zero or below were in 1987 and 1996–2001. In both instances, the ultra-low ERP precipitated a steep equity drawdown and sharp fall in long-dated bond yields. "The U.S. equity risk premium ... is exceptionally low by historical standards," they wrote in their five-year outlook on Tuesday. "A mean reversion to a higher equity risk premium typically involves a bond rally, an equity sell-off, or both." But reversion to the mean doesn't just happen by magic. A catalyst is needed. Equities have recovered largely because they were oversold in April, trade tensions have been dialed down, and investors remain confident that Big Tech will drive solid AI-led earnings growth. So even though huge economic, trade, and policy risks continue to hang over markets, there is no sign of an imminent catalyst that would cause an equity market selloff. The flip side of equities looking expensive is that bonds look like a bargain. Indeed, the relative divergence between stocks and bonds is such that, by one measure, U.S. fixed income assets are the cheapest relative to equities in over half a century. Using national flow of funds data from the Federal Reserve, retired strategist Jim Paulsen calculates that the total market value of U.S. bonds as a percentage share of the total market value of U.S. equities is the lowest since the early 1970s. "Since the aggregate U.S. portfolio is currently aggressively positioned, investors may have far more capacity and desire to boost bond holdings in the coming years than most appreciate," Paulsen wrote last week. But bonds are 'cheap' for a reason. Washington's profligacy – the reason ratings agency Moody's recently stripped the U.S. of its triple-A credit rating – and inflation worries have kept yields stubbornly high. The term premium - the risk premium investors demand for holding long-term debt rather than rolling over short-dated loans - is the highest in over a decade, reflecting concerns about Uncle Sam's long-term fiscal health. And the diagnosis here shows no signs of improving. Trump's 'Big Beautiful Bill' is expected to add $2.4 trillion to the U.S. debt over the next decade, according to the nonpartisan Congressional Budget Office, likely putting more upward pressure on yields. Of course, equity investors do seem to be pricing in a very rosy scenario, and the past few months have shown how quickly the market landscape can change. The U.S. economy could weaken more than expected, the trade war could escalate, or there could be a geopolitical surprise that causes bond yields and equity prices to fall. Investors should therefore be mindful of the warnings being sent by ERPs and other absolute and relative valuation metrics. However, they should also remember that stretched valuations can get even more stretched. As the famous saying goes, markets can stay irrational longer than investors can remain solvent. What could move markets tomorrow? Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
BBC News
an hour ago
- BBC News
US to partially evacuate embassy in Iraq over security threats
Non-essential American embassy staff and their dependents in Baghdad are evacuating from Iraq due to heightened security risks, US government sources said on did not say exactly what prompted the removal, however in recent days talks over Iran's nuclear programme appear to have stalled.A US state department official told the BBC: "We are constantly assessing the appropriate personnel posture at all our embassies. "Based on our latest analysis, we decided to reduce the footprint of our mission in Iraq." President Donald Trump told a podcast on Wednesday that he was growing less confident that a deal can be reached over Iran's nuclear US wants Iran to stop enriching uranium, which can be used to create a nuclear bomb, in exchange for easing economic Defence Minister Aziz Nasirzadeh said his country would retaliate against American bases in the region if talks fail and the US president orders military strikes against reported that US Defence Secretary Pete Hegseth also approved the voluntary departure of families of US military personnel from countries across the Middle East including Kuwait and on Wednesday, the UK's Maritime Trade Operations organisation issued a warning saying that increased military tensions in the Middle East could affect price of oil initially increased more than 4% on the news, in anticipation of regional insecurity potentially leading to supply 2,500 American troops are based in Iraq, according to the US defence reporting from Tom Bateman in Washington
Telegraph
an hour ago
- Telegraph
Trump plans memorial to his mother on new Scottish golf course
Donald Trump is creating a memorial garden to his Scottish mother on the site of his new golf course in Aberdeenshire. The main feature of the garden will be a tribute carved in stone imported from Mary Anne Trump's birthplace, the Isle of Lewis in the Outer Hebrides. The announcement of Mr Trump's tribute to his mother came as Trump International Scotland unveiled the layout for a new course alongside the existing links course on his Menie estate. It is set to formally open this summer. Known officially as the Old and the New, the courses will combine to create what the company describes as ' the greatest 36 holes in golf' on the Aberdeenshire coast. The US president's mother was born Mary Anne MacLeod on Lewis, but emigrated to New York in 1930 when she was 18. She was one of tens of thousands of Scots who travelled to the US and Canada in the early years of the last century looking to escape economic hardship at home. She was hired as a domestic servant at the Carnegie Mansion on New York's Fifth Avenue and six years later married Frederick Trump, the successful property developer son of German migrants, and one of the most eligible men in New York. The US president was the fourth of the couple's five children. Mr Trump has spoken fondly of his mother, who died in 2000, aged 88. He said in an interview last year: ' The Scottish very great people, they're tough people. They're good fighters. [My mother] was funny, she had a great sense of humour.' Sarah Malone, the executive vice-president of Trump International, said: 'With the New course opening now fast approaching, we are delighted to share the final layout of this extraordinary links and the completion of The Greatest 36 Holes. 'It has been a phenomenal journey to create two truly exceptional world-class championship golf courses, across this magnificent stretch of North Sea coastline. 'The Trump family has a deep affection for Scotland, not only as the home of golf, but as the ancestral home of President Trump's beloved mother, Mary Anne MacLeod.' The plans for the second course were approved in 2019 alongside proposals for 550 new homes, shops, offices and restaurants. Planners received 2,921 valid representations from the public about the plan, 2,918 of which were objections and just 3 supported the Trump Organisation application. But despite the significant local opposition, Aberdeenshire council approved the £150 million plan.
