With the temporary respite in U.S. tariffs on key countries, investors could turn their attention to earnings. But Alphabet earnings failed to lift the mood.
U.S. President Donald Trump on Monday paused tariffs on Mexico and Canada , and, in so doing, also stemmed the dip in stocks, at least for now. Major U.S. benchmarks snapped a two-day losing streak in a relief rally.
With the temporary respite in U.S. tariffs on key countries, investors could turn their attention to earnings. But what they saw on Tuesday wasn't likely to comfort them after the turmoil wreaked by tariffs.Alphabet's scorecard for its fourth-quarter performance missed the"A" grade so many expect from Big Tech names. Meanwhile, AMD's data center sales, a key part of its business, missed estimates.
Investor disappointment was immediate: Shares of both companies slumped in extended trading, signaling that corporate fundamentals remain critical to stock performance., causing shares to fall as much as 9% in extended trading. The tech giant's revenue came in at $96.47 billion, compared with $96.56 billion expected by LSEG. CEO Sundar Pichai said in the earnings release that Google expects to invest"approximately, which missed the FactSet estimate of $4.14 billion.
When Trump launched tariffs in his first term, inflation was low and the Fed was raising rates as it sought a"neutral" level. A manufacturing recession ensued in 2019. This time around, the targeted tariffs that Trump had previously used have been replaced by the threat of blanket duties — which could slow growth and raise prices, putting the U.S. Federal Reserve in a position where it has to weigh economic expansion against controlling inflation.
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