Wall Street's rally roars into a 3rd day as companies' profits keep
piling up, for now at least
[April 25, 2025] By
STAN CHOE
NEW YORK (AP) — Wall Street’s rally kept rolling Thursday as
better-than-expected profits for U.S. companies piled up, though CEOs
said they’re unsure whether it will last because of uncertainty created
by President Donald Trump’s trade war.
The S&P 500 charged 2% higher and pulled within 11% of its record set
earlier this year. The Dow Jones Industrial Average rose 486 points, or
1.2%, while the Nasdaq composite jumped 2.7%.
Tech stocks helped lead the way, including ServiceNow after the AI
platform company delivered a stronger profit for the start of 2025 than
analysts expected. The company, whose AI agents help clients manage
their customers, saw its stock jump 15.5% after it also gave a
forecasted range for upcoming subscription revenue that beat some
analysts’ expectations.
Southwest Airlines likewise reported stronger results than expected for
the first three months of the year. But its stock flipped between gains
and losses through the morning after it also became the latest U.S.
carrier to say the outlook for the economy looks so cloudy that it’s
pulling some of its financial forecasts for the year.
CEO Bob Jordan said the company is “controlling what we can control,”
and it’s cutting how much flying it will do in the second half of the
year. Southwest’s stock eventually pulled higher in afternoon trading
and finished up 3.7%.
Rival American Airlines, meanwhile, pulled its financial forecasts for
the full year and said it plans to provide an update when “the economic
outlook becomes clearer.” Its stock rose 3.1% after it also topped
profit expectations for the latest quarter.
Companies across industries have been talking about how difficult it is
to give financial forecasts for the upcoming year, as Wall Street
typically expects them to do, because of the on-again-off-again rollout
of Trump’s tariffs.
U.S. stocks rallied the prior two days on hopes that Trump was softening
his approach on tariffs and his criticism of the Federal Reserve, which
had earlier shaken markets. But China, the world’s second-largest
economy, on Thursday denied it’s involved in active negotiations with
the United States over tariffs, saying that any suggestion of progress
was as groundless as “trying to catch the wind.”
Calling Trump’s policy announcements “headline turbulence,” Tan Jing Yi
of the Asia & Oceania Treasury Department at Mizuho Bank warned that
global economies could be hurt in the long run, adding: “Sentiments
swing from hopes of intense relief to inflicted economic gloom.”
This week began with a steep loss for U.S. stocks on fears about the
trade war, and it’s been a microcosm of the market’s severe swings in
recent weeks as investors struggle with how to react to conditions that
sometimes change by the hour. The only certainty is that the market will
likely keep swinging until more clarity arrives on tariffs, which many
investors expect would cause a recession unless they’re rolled back.
“It’s an unhealthy market backdrop right now, and we’re trying not to
react too much,” said John Belton, a portfolio manager at Gabelli Funds.
Households across the United States are preparing for the higher prices
that economists say tariffs would bring, while the head of the
International Monetary fund urged countries to move “swiftly’’ to
resolve their trade disputes that threaten global economic growth.
[to top of second column] |
Trader Edward McCarthy works on the floor of the New York Stock
Exchange, Thursday, April 24, 2025. (AP Photo/Richard Drew)
 In the meantime, many U.S. companies
are continuing to report stronger profit than analysts expected for
the start of 2025, while offering caution and uncertainty about the
year ahead.
Toy company Hasbro was a winner and jumped 14.6% after reporting
better profit and revenue for the latest quarter than analysts
expected. It cited strong growth for its Magic: The Gathering game,
among other products.
Texas Instruments rallied 6.6% after the semiconductor company
likewise reported a stronger profit than expected.
They helped offset a 3.7% drop for Procter & Gamble, which fell even
though the company behind Olay, Tide and Pampers reported stronger
results for the latest quarter than expected. Its revenue came in
below expectations, and it also cut its forecast for profit growth
this fiscal year.
Procter & Gamble said it’s expecting a $200 million hit to its
earnings this fiscal year because of higher costs for commodities.
At PepsiCo, CEO Ramon Laguarta said his company expects “more
volatility and uncertainty” and that “consumer conditions in many
markets remain subdued and similarly have an uncertain outlook.”
His company’s stock fell 4.9% after the beverage and snack maker
cuts its forecast for an underlying measure of profit over 2025,
citing increased costs from tariffs and subdued conditions for
customers. A 25% tariff on imported aluminum for cans is among those
hitting PepsiCo and other beverage makers.
All told, the S&P 500 rose 108.91 points to 5,484.77. The Dow Jones
Industrial Average added 486.83 to 40,093.40, and the Nasdaq
composite jumped 457.99 to 17,166.04.
In the bond market, Treasury yields continued to ease following
their disconcerting run higher earlier this month. Yields usually
fall when fear is dominating markets, but their surprising earlier
rise stirred fears that Trump’s trade war was degrading the U.S.
bond market’s status as one of the world’s safest places to keep
cash.
The yield on the 10-year Treasury fell to 4.30% from 4.40% late
Wednesday, in part on expectations that the Federal Reserve could
cut interest rates later this year to soften the economic blow that
may come from tariffs.
Yields sank after a report showed slightly more U.S. workers applied
for unemployment benefits last week than economists expected. A
separate report said sales of previously occupied homes weakened by
more than expected in March.
In stock markets abroad, indexes were mixed amid modest moves across
much of Europe and Asia.
___
AP Business Writers Yuri Kageyama and Matt Ott contributed.
All contents © copyright 2025 Associated Press. All rights reserved |
