Earnings season is when publicly traded companies report revenues, profits, and cash flows earned in the last quarter. It happens four times a year and gives investors real numbers to work with, not just guesses or opinions. This is important because stock prices are often based on what people expect to happen in the future, and earnings season gives everyone a reality check.
Right now, many companies are showing solid results for the last quarter (January–March), but they’re not confident about the future. A big reason? The ongoing trade war and constantly changing tariffs (extra taxes on goods from other countries). This uncertainty makes it harder for businesses to plan, invest, or give guidance.
Wall Street analysts haven’t yet fully factored in the possible impact of recent tariff announcements. A few weeks ago, on April 2nd, the US announced new tariffs, but most earnings forecasts haven’t changed much since then.
Short-term estimates (for the first quarter of the year) haven’t changed much, while full-year forecasts are starting to go down, but only slightly, by about 1–2%.
However, a deeper look shows a trend: very few analysts are raising their earnings estimates. In fact, many are quietly lowering them. This suggests that companies might have tougher times ahead, especially if the trade war continues.
One sector to watch is industrial companies. These are the firms that make equipment, tools, machines, and parts like Rockwell, Stanley, General Electric (GE), and RTX (formerly Raytheon Technologies).
They reflect how much businesses are investing. If other businesses are spending money to grow, like building new factories or upgrading machinery, industrial companies benefit. But if uncertainty from the trade war makes companies cautious, they’ll delay spending, which hurts industrial sales.
They depend on global supply chains. Many industrial companies get parts or materials from other countries. So, when tariffs are introduced, their costs go up and profits go down.
Data from the Institute for Supply Management (ISM) shows that new manufacturing orders in the US have been weak since early 2022. There was a brief recovery in late 2024, but it didn’t last. That means factories aren’t seeing a lot of new business.
GE reported strong revenue and profit numbers and said tariffs might cost them about $500 million. Since investors were expecting something like that, the stock price actually went up.
RTX, however, shocked investors by revealing an expected tariff cost of $850 million, much higher than expected. That’s more than 13% of their profits from last year. Their stock dropped 10% in one day, even while the rest of the market was doing well.
That kind of surprise could happen again with other companies this earnings season.
Some experts are closely watching how tariffs could impact inflation too, especially in the short term. One tool they use to measure this is called an inflation swap, which is a type of financial contract that reflects what people think inflation will be in the future.
Short-term inflation expectations are rising. This is because tariffs make imported goods more expensive, and those costs often get passed to consumers.
Long-term inflation expectations haven’t moved as much. This could mean the market thinks either, the inflation will be short-lived (just a spike), or the economy might slow down so much that inflation won’t stick.
After President Trump announced a 90-day pause on some tariffs (except on China), inflation expectations dipped slightly. But many experts still expect higher prices in the near term, especially because 37% of goods from China are “intermediate goods” (parts used to make other products). If those get more expensive, US manufacturers may face higher costs and raise prices.
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