Financial Markets                      05/06 15:31

   

   U.S. stocks closed lower Tuesday as quarterly results show more companies 
are scrubbing their forecasts for upcoming profits because of uncertainty 
created by President Donald Trump's tariffs.

   The S&P 500 fell 0.8%, its second drop after breaking a nine-day winning 
streak, its longest such run in more than 20 years. The Dow Jones Industrial 
Average dropped 0.9%, and the Nasdaq composite finished 0.9% lower.

   Palantir Technologies was one of the heaviest weights on the market as it 
sank 12%. The company, which offers an AI platform for customers, dropped even 
though it reported a profit for the latest quarter that met analysts' 
expectations and raised its forecast for revenue over the full year.

   AI-related companies have been finding it more difficult recently to 
convince investors to support their stocks after they've already shot so high. 
Palantir's stock's price remains near $110, when it was sitting at only $20 
less than a year ago.

   The return to Earth for AI stocks is happening as Trump's tariffs change the 
economic landscape for other companies.

   Clorox CEO Linda Rendle said her company saw changes in shopping behavior 
during the first three months of the year, for example, that led to lower 
revenue. The company reported both weaker revenue and profit for the latest 
quarter than analysts expected. Clorox expects the slowdowns to continue in the 
current quarter, and its stock fell 2.4%.

   Mattel, meanwhile, said it's "pausing" its financial forecasts for 2025, in 
part because the "evolving U.S. tariff landscape" is making it difficult to 
predict how much U.S. shoppers will spend over the holiday season and the rest 
of this year.

   The toymaker closed 2.8% higher after also reporting better results for the 
latest quarter than analysts feared.

   Ford Motor said it's expecting to take a $1.5 billion hit this year because 
of tariffs. The automaker also said it's cancelling financial forecasts for the 
full year because of "tariff-related uncertainty." The stock rose 2.7%.

   They're the latest companies to join a lengthening list that have yanked 
their forecasts for the year given uncertainty about what Trump's on-again, 
off-again rollout of tariffs will do to the economy. The hope is that Trump 
will relent on some of his tariffs after reaching trade deals with other 
countries. Without them, many investors expect the economy to fall into a 
recession.

   Regardless, all the will-he-won't-he uncertainty around tariffs has already 
made U.S. households more pessimistic about the economy and could affect their 
long-term plans for purchases. That uncertainty has helped fuel a surge in 
imports ahead of potentially more severe tariffs ahead.

   The U.S. trade deficit soared to a record $140.5 billion in March as 
consumers and businesses alike tried to get ahead of tariffs that went into 
effect in April and others that have been postponed until July. That follows 
another update from last week showing that the U.S. economy shrank at a 0.3% 
annual pace during the first quarter of the year because of a surge in imports.

   Some companies say they're already seeing impacts to their business from the 
uncertainty created by tariffs.

   Food processing giant Archer Daniels Midland said that operating profit for 
agricultural services slumped 31% during its most recent quarter because of 
trade policy uncertainty. The stock rose 1.7%.

   DoorDash fell 7.4% after reporting weaker revenue than analysts expected for 
the latest quarter, though it may have also offered a more encouraging snapshot 
of how U.S. households are doing. The company said order growth in its U.S. 
marketplace remained healthy and consistent with average growth over the last 
year.

   All told, the S&P 500 fell 43.47 points to 5,606.91. The Dow dropped 389.83 
points to 40,829, and the Nasdaq lost 154.58 points to close at 17,689.66.

   Treasury yields closed broadly lower in the bond market. The yield on the 
10-year Treasury slipped to 4.31% from 4.36% late Monday.

   The Federal Reserve is beginning a two-day meeting, and it will announce its 
next move on interest rates Wednesday. Virtually no one expects it to do 
anything to its main rate, even though Trump has been advocating for cuts.

   "While the possibility still exists for potential rate cuts later this year, 
the economic picture is complicated, and it's too early to know if or when 
those cuts might happen," said Michele Raneri, vice president and head of U.S. 
research and consulting at TransUnion.

   Lower interest rates could help goose the economy, but they could also give 
inflation more fuel. And worries are already simmering that Trump's tariffs 
could push inflation higher.

   Markets were mixed across Europe and Asia. Indexes rose 1.1% in Shanghai and 
0.7% in Hong Kong.

   ___

   AP Business Writers Matt Ott and Elaine Kurtenbach contributed.

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