Stocks in the United States experiencing decline due to the most recent disheartening economic indication
The Indian Sensex dipped 0.4% on concerns about trade tensions with the United States, particularly over oil purchases from Russia, while U.S. stock indexes also experienced a slip on Tuesday due to similar apprehensions. The U.S. stock market is under pressure to produce bigger profits, as a recent surge has led to criticism of becoming too expensive.
Meanwhile, the yield on the 10-year Treasury eased to 4.19% after the release of the jobs report, a significant move for the bond market. In the corporate sector, Axon Enterprise leaped 16.4% following a much stronger profit than analysts expected, citing growth in its AI offerings. Palantir Technologies also rose 7.8% after reporting a stronger profit for the latest quarter than anticipated.
However, the impact of tariffs is causing concerns for many businesses, particularly in the transportation and retail sectors. These tariffs are significantly increasing costs by raising input and finished goods prices, which are often passed on to consumers, leading to higher prices for goods and services in these industries.
Transportation and retail businesses face higher costs from tariffs on imported parts and consumer goods, which increase overall operating expenses and inventory costs. For example, tariffs on auto parts raise vehicle prices and maintenance costs, directly affecting transportation services. Retailers, especially smaller ones, are concerned about their ability to stay in business under rising tariff costs, as many rely on low-cost imported materials and finished products.
Overall inflation pressures in these sectors are increasing, as tariffs push up import prices that feed into consumer prices. This inflationary impact affects retail pricing and transportation costs, which rely heavily on global supply chains and fuel inputs. Macroeconomic effects include slower GDP growth and higher unemployment, indirectly impacting retail and transportation through weaker overall demand and labor market conditions.
In the U.S., Edgewell Personal Care, the company behind the Schick, Playtex, and Banana Boat brands, fell 18.8% due to lower profit and revenue for the latest quarter than analysts expected. Yum Brands, the company behind KFC, Taco Bell, and Pizza Hut, also reported results for the latest quarter that fell short of analysts' expectations, causing a 5.1% drop. American Eagle Outfitters dropped 9.5% due to controversy surrounding its advertisements.
Trade policy was one of the most common topics U.S. services businesses talked about in the latest monthly survey compiled by the Institute for Supply Management about their activity. Companies in the real estate, rental and leasing industry mentioned economic "uncertainty remains the dominant theme," but the tariff talk has seemed to tune out the noise. One company in the health care and social assistance business said tariffs are causing additional costs as they continue to purchase equipment and supplies.
In Europe and Asia, stock markets rose across much of the regions, excluding India. Increased hopes for coming cuts to interest rates by the Federal Reserve, along with stronger-than-expected profit reports from U.S. companies, helped to keep the losses in check. However, the ongoing trade tensions and concerns about tariffs continue to cast a shadow over the global economy.
[1] https://www.cnbc.com/2019/08/13/us-tariffs-are-raising-transportation-costs-and-hurting-small-businesses.html [2] https://www.reuters.com/article/us-usa-trade-retail/us-retailers-brace-for-tariff-impact-as-trade-war-escalates-idUSKBN1KN293 [3] https://www.bloomberg.com/news/articles/2019-08-13/u-s-tariffs-could-slow-economic-growth-by-0-5-percent-by-2026 [4] https://www.washingtonpost.com/business/economy/u-s-trade-tariffs-are-raising-prices-for-consumers-and-businesses-across-the-economy/2019/08/12/4f07c25c-d42a-11e9-9864-6b2143d1256a_story.html [5] https://www.washingtonpost.com/business/economy/u-s-trade-tariffs-could-cost-up-to-1-trillion-in-gdp-by-2030-report-finds/2019/07/23/5879610c-d16d-11e9-911e-5c792a8f005e_story.html
- Microsoft, a tech giant based in Seattle, is keeping a close eye on the trade tensions and their potential impact on businesses, particularly in the technology sector.
- The escalating trade war is causing a ripple effect beyond just the United States and India, impacting the global economy.
- In the healthcare sector, providers and suppliers are also feeling the pinch of increased costs due to tariffs on equipment and supplies.
- The real estate market might face a slowdown due to concerns about the economy and job losses that could occur as a result of trade disputes.
- The business world is looking towards personal finance and investments for stability, with an increased focus on data and cloud computing to reduce costs and increase efficiency.
- The home-and-garden industry could be affected by economic fluctuations, as consumers might cut back on renovation and decoration projects due to uncertainty.
- The transportation sector, not just in the United States but globally, is grappling with the added costs of tariffs on imported parts and goods, potentially leading to higher prices for consumers.
- The retail industry, especially smaller businesses, are nervous about their survival as the tariff costs continue to rise.
- Inflation in the transportation and retail sectors is on the rise due to the increased costs of goods from tariffs, which might lead to a slowdown in GDP growth and increased unemployment rates.
- The Edgewell Personal Care company, known for brands such as Schick, Playtex, and Banana Boat, experienced a dip in profits and revenue, reflecting the broader economic concerns.
- Yum Brands, the parent company of KFC, Taco Bell, and Pizza Hut, also reported disappointing results, leading to a decline in their stock price.
- American Eagle Outfitters faced a drop in stocks due to a controversy surrounding their advertisements, adding to the challenges faced by the retail sector.
- Economic uncertainty is a major concern for businesses across sectors, with companies in the real estate, health care, and other industries acknowledging the impact of tariffs on their operations.
- The Federal Reserve's potential interest rate cuts and stronger-than-expected profit reports from U.S. companies are contributing to the resilience of stock markets in Europe and Asia, despite the ongoing trade tensions.
- The sports industry, such as football, NFL, sports betting, and American football, might experience changes due to economic fluctuations and consumer spending patterns, much like other sectors. The weather, while seemingly unrelated, could also have an impact on sports events and related industries.
