U.S. Stocks Drop as Trump Extends Tariffs, Earnings Reports Awaited

U.S. stocks opened lower on Friday, with investors focusing on tariff developments and corporate earnings. President Trump's latest comments on maintaining high tariffs for another year added pressure to the market. The U.S. administration's claim that negotiations on tariffs are ongoing was once again denied by China. Investors are weighing the impact of key earnings reports from companies like Alphabet.

Prior to Friday, U.S. stocks had shown a steady performance for the week. As of Thursday's close, the S&P 500 and Nasdaq indices had risen 3.8% and 5.4% respectively, while the Dow Jones Industrial Average had climbed 2%. However, since Trump announced "reciprocal tariffs" on April 2, U.S. stocks have been in a wide trading range. Investors are awaiting progress in negotiations between the U.S. and key trading partners.

Trump's latest remarks on tariffs have increased market pressure. He stated that if the U.S. can maintain tariffs of 20% to 50% on various countries for another year, he would consider it a "complete victory." Trump also denied that rising U.S. Treasury yields forced him to delay tariffs by 90 days, stating, "The bond market is panicking, but I am not."

China has reiterated that it has not engaged in any form of consultation or negotiation on tariffs. On Thursday, the Ministry of Commerce spokesperson stated that there are no trade talks and urged the U.S. to remove "unilateral" tariffs. On Friday, the Foreign Ministry spokesperson reiterated that China and the U.S. are not currently engaged in any form of consultation or negotiation on tariffs and urged the U.S. not to mislead the public.

Earlier, the White House had signaled a softening stance, with the U.S. currently imposing tariffs totaling 145% on Chinese goods exported to the U.S. On Tuesday, Trump stated that tariffs would "significantly decrease, but not to zero."

Colin Graham, multi-asset strategy manager at Robeco Groep, commented, "Trump has started to back down and is no longer insisting on 'the art of the deal.' However, we know he could change his mind at any time and reimpose tariffs, so these messages are more like noise than clear signals."

Peter Kinsella, head of foreign exchange strategy at UBS, stated, "The various statements and messages from the U.S. are contradictory, and the entire narrative is confusing. It's impossible to trade under these conditions."

Richard Flax, chief investment officer at Moneyfarm, said, "Everyone generally agrees that these tariff levels are unsustainable in the long term, but it may take some time to achieve an adjustment. The question is at what level these tariffs will eventually stabilize."

Anthony Saglimbene, chief market strategist at Ameriprise, stated, "The market only needs a spark to break out of its slump. U.S. stocks are expected to remain volatile, with earnings reports from major tech companies next week being the key factor in determining market direction."

In terms of corporate earnings, Alphabet, the parent company of Google, reported better-than-expected first-quarter results, with its stock price surging 5%. Intel, on the other hand, issued a pessimistic outlook and announced significant cuts to its operating and capital expenditures, causing its stock price to plummet 7%.

Investors are also keeping an eye on the possibility of an early interest rate cut by the Federal Reserve. Federal Reserve Governor Christopher Waller stated that if Trump's aggressive tariff policies impact the job market, he would support a rate cut. Cleveland Federal Reserve President Loretta Mester said on Thursday that if the economic outlook becomes clear, the Federal Reserve could adjust interest rates as early as June.

Currently, the market expects a 25 basis point rate cut in June and three rate cuts by the end of the year. The next Federal Reserve meeting will be held on May 6-7, with the market widely expecting the Federal Reserve to remain on hold at that time.