US Stock Markets Decline Amid Trade Uncertainty and Energy Slump
The S&P 500 Index ($SPX) is currently down -0.82%, the Dow Jones Industrial Index ($DOWI) has decreased by -0.49%, and the Nasdaq 100 Index ($IUXX) is down -0.81%. Additionally, June E-mini S&P futures (ESM25) are down -0.88%, while June E-mini Nasdaq futures (NQM25) show a decline of -0.87%.
Stock indexes are trading lower today, impacted by uncertainty around US-China trade relations. President Trump stated on Sunday that he has no immediate plans to communicate with Chinese President Xi Jinping, although discussions with some US trading partners may occur as soon as this week.
Energy sector stocks are falling sharply, with the price of WTI crude dropping over -1% to a 3.5-week low. This follows OPEC+’s decision on Saturday to increase crude production levels by 411,000 bpd starting in June, raising concerns about a potential global oil surplus. Saudi Arabia has also suggested that further increases in crude output may follow, seen as a strategy to lower oil prices and address overproduction by members like Kazakhstan and Iraq.
Key Economic Indicators and Calendar
This week’s market will pay close attention to US tariffs and potential changes in trade policy. Later today, the April ISM services index is anticipated to fall by -0.5 to 50.3. Tomorrow, the March trade deficit is expected to widen to -$136.7 billion. On Wednesday, the FOMC is expected to maintain its federal funds target range at 4.25%-4.50%. Comments from Fed Chair Powell after the FOMC meeting will likely be scrutinized for insights into future monetary policy. Thursday will bring reports on weekly initial unemployment claims, Q1 nonfarm productivity (projected at 0.7%), and Q1 unit labor costs (projected at +5.2%).
Currently, the market is pricing in only a 2% chance of a -25 basis point rate cut after the FOMC meeting on Wednesday.
Corporate Earnings and Forecasts
The Q1 earnings season is underway. Data from Bloomberg Intelligence indicates a market consensus for Q1 year-over-year earnings growth of +6.7% for S&P 500 companies, down from earlier expectations of +11.1%. So far, 78% of the 332 S&P 500 companies that have reported earnings have surpassed estimates. Full-year 2025 corporate profits are expected to grow by +9.4%, a decrease from January’s forecast of +12.5%.
International Market Overview
Global stock markets are also declining today. The Euro Stoxx 50 is down -0.25%. The Shanghai Composite in China is closed for Labor Day, and Japan’s Nikkei 225 is closed for Children’s Day.
Interest Rates and Bond Market Trends
June 10-year T-notes (ZNM25) have increased by +1 tick, with the 10-year T-note yield up +1.8 basis points to 4.326%. Although T-notes are seeing slight increases, the yield reached a one-week high of 4.334%, influenced by caution leading up to the Wednesday FOMC meeting. Supply concerns are also putting pressure on T-notes as the Treasury begins a $125 billion auction package this week.
Despite these pressures, T-notes are supported by safe-haven demand due to the slump in stock prices. This support is further bolstered by gains in 10-year German bunds. In Europe, government bond yields are trending lower today, with the 10-year German bund yield down -1.2 basis points to 2.521%. The UK gilt yield is not trading today due to the May Day holiday.
The Eurozone’s May Sentix investor confidence index has risen by +11.4 to -8.1, exceeding expectations of -11.5. Swaps are currently predicting a 97% chance of a -25 basis point rate cut by the ECB at their June 5 policy meeting.
Notable Stock Movements
The “Magnificent Seven” stocks are facing downward pressure, with Tesla (TSLA), Amazon.com (AMZN), and Apple (AAPL) declining over -2%. Other notable declines include Nvidia (NVDA) down -0.46% and Meta Platforms (META) down -0.18%.
Energy stocks and service providers are also experiencing losses, reflecting the over -1% fall in WTI crude prices. Consequently, Apa Corp (APA) and Occidental Petroleum (OXY) are both down by more than -3%. Other companies such as Baker Hughes (BKR), ConocoPhillips (COP), and Exxon Mobil (XOM) have seen declines exceeding -2% as well.
Media stocks are declining after President Trump suggested a potential 100% tariff on films produced overseas. Consequently, Warner Bros Discovery (WBD) and Netflix (NFLX) are down more than -2%, alongside Disney (DIS) and Paramount Global (PARA) which are down over -1%.
ON Semiconductor (ON) leads the losses in the S&P 500 and Nasdaq 100, down more than -9% despite reporting better-than-expected Q1 revenue and forecasting Q2 adjusted gross margins below consensus.
Zimmer Biomet Holdings (ZBH) dropped more than -8% after cutting its full-year revenue estimate. Tyson Foods (TSN) is also down -6% after missing sales expectations for Q2.
In contrast, Howard Hughes Holdings (HHH) is rising over +4% after announcing a significant investment from Pershing Square Capital. Freshpet (FRPT) has gained more than +2% after exceeding sales projections for Q1, while Axsome Therapeutics (AXSM) similarly rose after surpassing cash forecasts. Wendy’s (WEN) also saw an increase beyond +1% after a positive stock upgrade.
Upcoming Earnings Reports for May 5, 2025
Notable companies reporting include Clorox Co/The (CLX), Coterra Energy Inc (CTRA), Cummins Inc (CMI), Diamondback Energy Inc (FANG), Ford Motor Co (F), Henry Schein Inc (HSIC), Loews Corp (L), ON Semiconductor Corp (ON), Palantir Technologies Inc (PLTR), Realty Income Corp (O), Tyson Foods Inc (TSN), Vertex Pharmaceuticals Inc (VRTX), Williams Cos Inc/The (WMB), and Zimmer Biomet Holdings Inc (ZBH).
On the date of publication, Rich Asplund did not hold any positions in the securities mentioned in this article. The information provided is for informational purposes only. For more details, please refer to the Barchart Disclosure Policy.
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The views expressed in this article are those of the author and do not necessarily reflect those of Nasdaq, Inc.
