MW Wall Street's outlook sours on second quarter, with bigger forecast cuts than normal

By Bill Peters

Earnings Watch: Mattel and Ford also report, as markets rebound but look for trade-war clarity

Nobody knows how the U.S.' trade war and negotiations with other countries will shake out for the economy. But Wall Street is taking slightly more caution than usual on the months ahead regardless.

Wall Street analysts last month cut their second-quarter profit estimates by a wider range than average, according a FactSet report on Friday. Those cuts have followed the creeping pessimism over the first three months of this year, as a post-holiday cooldown and bad weather mixed with anxieties over inflation, tariffs and efforts to shrink the federal government.

Then, early last month, President Donald Trump announced expansive new tariffs on much of the world. Adjustments and carve-outs followed. But from March 31 to April 30, the report said, Wall Street analysts cut their second-quarter earnings per share estimates on S&P 500 companies by 2.4%.

During the past 20 years, FactSet said, the average decline in those estimates during the first month of a quarter has been 1.9%. Analysts generally lower those estimates over time to reflect financial realities or, as some critics say, to lower the bar for companies.

The U.S. economy shrunk in the first quarter for the first time in three years. But even as anxiety prevailed, April's jobs report was better than expected. And the S&P 500 Index SPX on Friday wiped a way the hit it took after Trump's "Liberation Day" tariff announcement on April 2.

On Thursday, e-commerce giant Amazon.com Inc. - perhaps the biggest proxy for shoppers' spending habits to report first-quarter earnings so far - said it hadn't seen "any attenuation of demand yet."

"To some extent, we've seen some heightened buying in certain categories that may indicate stocking up in advance of any potential tariff impact," Chief Executive Andy Jassy said on the company's earnings call. "We also have not seen the average selling price of retail items appreciably go up yet."

He also said that demand for "everyday essentials" was strong, and accounted for one out of every three items it sold in the U.S. And he said that its vast ranks of sellers on its online retail platform would give shoppers a wider variety and price range than rivals.

William Blair analyst Dylan Carden said he was willing to take Amazon's $(AMZN)$ word on that. But he said risks could last if the U.S. keeps up its trade battle with China, and noted Amazon's "significant" exposure to China, "either through direct sellers or U.S.-based sellers importing Chinese goods."

Moreover, analysts have been worried about Trump's closure of a loophole shielding cheaper goods from import taxes, a move with potentially big implications for e-commerce. But while Amazon's outlook didn't exactly help shares, Sheraz Mian, director of research at Zacks, said it "could have been a lot worse."

Other analysts basically agreed. "Seems to be doing just fine," Wedbush analysts said. And BofA analysts said that Amazon was "well-positioned" for any blow from tariffs.

"This too shall pass," they said.

This week in earnings

For the week ahead, 92 S&P 500 companies will report results, according to FactSet.

Results from amusement-park operators Walt Disney Co. and Six Flags Entertainment Corp. will, per Six Flags' $(FUN)$ ticker, offer an indication of the trade war's impact on people's willingness to have fun. In particular, Disney's $(DIS)$ results could also shed more light on the impact on tourism, amid concerns about anti-U.S. backlash.

Disney's results, along with those from Warner Bros. Discovery Inc. (WBD) and Paramount Global (PARA), will also offer an update on streaming and media, amid an entertainment-industry pullback and legal pressures from Trump and the government. Amid a frantic news cycle, the New York Times Co. $(NYT)$ will also report. So will private prison and detention-facility operator GEO Group Inc. $(GEO)$, amid Trump's massive immigration crackdown efforts.

Results are also due from gig-economy platforms Uber Technologies Inc. $(UBER)$, Lyft Inc. $(LYFT)$ and DoorDash Inc. $(DASH)$. Earnings from Tyson Foods Inc. $(TSN.AU)$ and Clorox Co. $(CLX)$ could show us more about spending on essentials. Electric-vehicle maker Rivian Automotive Inc.'s $(RIVN)$ results arrive after a big earnings miss from Tesla Inc. $(TSLA)$

Results are also forthcoming from the following companies: Palantir Technologies Inc. (PLTR), Hims & Hers Health Inc. $(HIMS)$, Electronic Arts Inc. $(EA)$, Super Micro Computer Inc. $(SMCI)$, Advanced Micro Devices Inc. $(AMD)$, Dutch Bros Inc. (BROS), AMC Entertainment Holdings Inc. $(AMC)$, Molson Coors Beverage Co. $(TAP)$, Planet Fitness Inc. (PLNT), Crocs Inc. $(CROX)$, Peloton Interactive Inc. $(PTON)$ and Coinbase Global Inc. $(COIN)$.

The call to put on your calendar

Mattel: As the trade war risks throttling the world's supply chains, Trump last week said that perhaps children "will have two dolls instead of 30 dolls." The Toy Association, an industry group, said last month that Trump's tariffs on imported toys from China put the Christmas holiday "at risk" and said they could put smaller toy-makers out of business.

On Monday, results from one of the biggest toy-makers, Mattel Inc. $(MAT)$, the maker of Barbie and other classic toys, could offer more insight on the impact - and how many dolls the nation's children may ultimately end up having - as tariff-related friction endures.

Analysts have said that Mattel and its rival Hasbro Inc. $(HAS)$ are more protected from tariffs than some of their peers, and both companies have tried to reduce their reliance on China for manufacturing. While Hasbro, in April, said it could lean on cost savings initiatives and its "Wizards of the Coast" fantasy-gaming segment to offset tariffs on China's imports, its current financial forecasts don't include their impact. In February, Mattel took a stab at calculating the potential tariff impact. But that was before the bigger import taxes that Trump announced in April.

The number to watch

Ford's outlook: Last week, General Motors Co. $(GM)$ slashed its profit outlook, and said Trump's tariffs could cost as much as $5 billion. On Monday, when Ford Motor Co. $(F)$ reports results, it will be Chief Executive James Farley's turn to weigh in.

Ford will report after the president last week tried to provide modifications and offsets intended to give the auto industry a break on those 25% duties, which affect vehicles and the parts that go into them. Farley last week said Trump's tariff changes were a step in the right direction, but that continued discussion with the administration was needed to develop a "comprehensive set of policies," according to reports.

In February, Farley sounded the alarm on the possible impact of longer-term tariffs on imports from Canada and Mexico, but said bringing production back to the U.S. would be a "signature" accomplishment. Still, he said: "So far, what we're seeing is a lot of cost and a lot of chaos."

-Bill Peters

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May 04, 2025 10:00 ET (14:00 GMT)

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