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Wall Street drifts higher as companies keep piling up profits, for now at least

April 24, 2025

By STAN CHOE, Associated Press Business Writer

NEW YORK (AP) — U.S. stocks are drifting higher Thursday as better-than-expected profits for U.S. companies pile up, though CEOs say they’re unsure about whether it will last amid uncertainty created by President Donald Trump’s trade war.

The S&P 500 was 0.8% higher in morning trading, following a two-day rally driven by hopes that Trump was softening his approach on tariffs and his criticism of the Federal Reserve, which had earlier shaken markets. The Dow Jones Industrial Average was up 42 points, or 0.1%, as of 10 a.m. Eastern time, and the Nasdaq composite was 1.3% higher.

ServiceNow helped drive the market higher after the AI platform company delivered a stronger profit for the start of 2025 than analysts expected. The company, whose AI agents help clients with their customer management and human resources, saw its stock jump 15% after it also gave a forecasted range for upcoming subscription revenue that was above what some analysts expected.

Southwest Airlines likewise reported stronger results for the first three months of the year than analysts expected, but its stock was flipping between losses and gains. It became the latest U.S. carrier to say the outlook for the economy looks so cloudy that it’s pulling some of its financial forecasts for the year.

CEO Bob Jordan said the company is “controlling what we can control,” and it’s cutting how much flying it will do in the second half of the year. Southwest’s stock was most recently down 0.2%.

Companies across industries have been talking about how difficult it is to give financial forecasts for the year, as Wall Street typically expects them to do, because of the on-again-off-again rollout of Trump’s tariffs.

Stocks rallied the last two days on signals that Trump may be willing to lower his stiff tariffs on imports coming from China. But the world’s second-largest economy on Thursday denied the two sides were involved in active negotiations over tariffs, saying that any suggestion of progress in this matter was as groundless as “trying to catch the wind.”

Calling Trump’s policy announcements “headline turbulence,” Tan Jing Yi of the Asia & Oceania Treasury Department at Mizuho Bank warned that global economies could be hurt in the long run, adding, “Sentiments swing from hopes of intense relief to inflicted economic gloom.”

This week, which began with a steep loss on fears about the trade war, has been a microcosm of the severe swings the market has volleyed through as investors struggle with how to react to conditions that seem to change by the day and by the hour. The only certainty ahead is likely that the market will keep swinging until more clarity arrives on tariffs, which many investors expect will cause a recession unless they’re rolled back.

“It’s an unhealthy market backdrop right now, and we’re trying not to react too much,” said John Belton, a portfolio manager at Gabelli Funds.

Households across the United States are preparing for the higher prices that economists say tariffs would bring, while the head of the International Monetary fund urged countries to move “swiftly’’ to resolve trade disputes that threaten global economic growth.

In the meantime, many U.S. companies are continuing to report stronger profit for the start of 2025 than analysts expected, while offering caution and uncertainty about the year ahead.

Toymaker Hasbro was a winner on Wall Street and jumped 14.4% after reporting stronger profit and revenue for the latest quarter than analysts expected.

PepsiCo CEO Ramon Laguarta said his company expects “more volatility and uncertainty” and that “consumer conditions in many markets remain subdued and similarly have an uncertain outlook.”

His company’s stock fell 2.5% after the beverage and snack maker cuts its forecast for an underlying measure of profit over 2025, citing increased costs from tariffs and subdued conditions for customers. A 25% tariff on imported aluminum for cans is among those hitting PepsiCo and other beverage makers.

In the bond market, Treasury yields continued to ease following their disconcerting run higher earlier this month. Yields usually fall when fear is dominating markets, but their surprising rise had raised fears that the U.S. bond market was losing its status as one of the world’s safest places to keep cash because of Trump’s trade war.

The yield on the 10-year Treasury fell to 4.32% from 4.40% late Wednesday.

It sank after a report showed slightly more U.S. workers applied for unemployment benefits last week than economists expected.

In stock markets abroad, indexes were mixed amid modest moves across much of Europe and Asia.

AP Business Writers Yuri Kageyama and Mat Ott contributed.

Orange County Register

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Wall Street drifts higher as companies keep piling up profits, for now at least

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