Potential negative market surprise amid optimism due to US-China trade thaw

From Yahoo Finance: 2025-05-19 08:09:00

Investors should stay vigilant for negative market surprises amid renewed optimism on stocks due to the US-China trade thaw. Moody’s downgrade of the US government led to a sell-off as the 10-year Treasury yield rose above 4.5%. Third-quarter earnings season could see a significant impact from tariffs, potentially softening profits.

78% of S&P 500 companies reported positive earnings surprises for Q1, exceeding EPS estimates by 8.5%. Concerns about profits are rising, with executives highlighting the impact of tariffs on earnings calls. 91% of S&P 500 earnings calls mentioned tariffs, while uncertainty was cited by 381 companies, more than double the previous quarter.

Executives express concerns about future profits as investors remain optimistic despite tariff impacts. Third-quarter earnings could see higher-than-normal earnings in some sectors. Stay informed with Yahoo Finance’s Opening Bid podcast hosted by Brian Sozzi. Follow Sozzi on Twitter, Instagram, and LinkedIn for more insights. 1. The stock market saw a significant increase today, with the S&P 500 gaining 2.5% and the Dow Jones Industrial Average rising by 400 points. This surge was fueled by positive economic data and strong corporate earnings reports.

2. The unemployment rate in the United States has dropped to 5.8%, the lowest it has been since the start of the pandemic. This is a positive sign of economic recovery as more businesses reopen and hire new employees.

3. In international news, the G7 nations have agreed to a global minimum corporate tax rate of 15%. This decision aims to prevent multinational corporations from avoiding taxes by shifting profits to low-tax countries.

4. The FDA has approved a new drug for Alzheimer’s disease, the first treatment of its kind in nearly 20 years. This drug has shown promising results in slowing the progression of the disease and improving cognitive function in patients.



Read more at Yahoo Finance: This could be another market surprise after the Moody’s US credit rating downgrade