Traders are focusing on capital expenditures over earnings, with caution as companies cut spending plans.
From Yahoo Finance: 2025-04-23 16:10:00
Wall Street is shifting focus from slow earnings growth to capital expenditures. With Trump’s tariff uncertainty, investors are eager to see how companies are investing in their businesses. However, recent signs show caution, with companies like JB Hunt and United Airlines cutting spending plans. Economic surveys and production data also indicate a downturn in capital spending.
Pessimism grows as manufacturing companies scale back on capital expenditures. Fed surveys and business optimism indices show a decline in investment plans. Goldman Sachs predicts a drag on capital expenditures growth due to policy uncertainty. Company guidance is uncertain, with many CEOs lacking visibility into the future, especially in industries heavily impacted by tariffs.
Big Tech firms like Microsoft and the Magnificent Seven are expected to continue AI development spending, despite doubts emerging. Trump’s tariffs could hinder AI spending if a recession hits. Other major US companies like GE and Boeing will provide insight into overall investment trends. Capital-intensive industries with trade exposure face the most vulnerability.
Economic uncertainty from tariffs leads to CEO confidence drops and project delays, affecting capex. Manufacturers may suspend guidance due to trade uncertainty. Companies like Wesco, Fortive, and 3M are most exposed. Trucking and logistics companies, critical to the supply chain, are likely to cut capex. Shippers delaying fleet upgrades could impact truck manufacturers like Cummins and Paccar.
Trump’s tariffs could encourage some companies to invest in US manufacturing, offsetting spending declines. Building new factories or expanding US operations may please the administration. However, uncertainties remain as CEOs navigate trade challenges. The shifting landscape of capex and investment decisions will shape the economic outlook.
Read more at Yahoo Finance: Traders Fixated on What Companies Spend More Than Earn