Walmart, Cisco, and Foot Locker react to trade war uncertainty as Wall Street sends mixed signals
On Thursday economic reports out of the United States sent Canada’s main stock index more than 200 points higher, as mixed signals from south of the border raised investor hopes for a potential rate cut by the US Federal Reserve.
Accoridng to BNN Bloomberg, the S&P/TSX composite index rose 205.03 points to 25,897.48, supported by gains in industrial, telecommunication, and utility stocks.
According to Anish Chopra, managing director with Portfolio Management Corp., “Let’s say the US economy is slowing and inflation is cooling, that would allow the Fed to cut rates later this year.”
He said this scenario tends to create “a supportive backdrop for stock prices.”
Chopra also noted that declining interest rates tend to support dividend-paying stocks, especially in sectors such as telecom and financial services.
In New York, major stock indexes reflected similar optimism.
The Dow Jones industrial average gained 271.69 points to 42,322.75.
The S&P 500 increased 24.35 points to 5,916.93, while the Nasdaq composite dropped 34.49 points to 19,112.32.
Stocks received an added boost from falling Treasury yields, which lowered after US economic reports suggested the Fed could resume interest rate cuts later this year.
The yield on the 10-year Treasury dropped to 4.44 percent from 4.53 percent, and the two-year Treasury yield fell to 3.96 percent from 4.05 percent.
According to the US Commerce Department, retail sales in April rose just 0.1 percent from March, a significant drop from the previous month’s 1.7 percent gain.
The decline followed a surge in car sales ahead of Trump’s 25 percent auto import duty.
Meanwhile, US wholesale prices posted a 0.5 percent decline, the first drop since October 2023 and the steepest in five years, as reported by the Producer Price Index.
Other reports indicated that US manufacturing continues to contract, although jobless claims were lower than anticipated.
Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, said “the trade story isn’t over,” and noted that tariffs are still filtering through the economy.
Despite a 90-day stand-down between the US and China on tariffs, Chopra warned that “there could be potential issues with respect to tariffs.”
He added, “There’s certainly optimism for an agreement to come.”
However, he noted that tariffs remain in place and are continuing to affect the economy, warning that “we could have a tariff-driven increase in prices coming.”
Corporate results also reflected uncertainty.
Walmart, the largest US retailer, said it must raise prices due to the cost impact of import tariffs.
The company declined to issue a quarterly profit forecast, citing “the range of near-term outcomes being exceedingly wide and difficult to predict,” as stated by Chief Financial Officer John David Rainey.
However, Walmart still expects sales to grow between 3.5 percent and 4.5 percent, excluding currency effects.
Walmart’s shares slipped 0.5 percent, while Deere’s stock gained 3.8 percent despite lowering its full-year profit forecast, as it reported stronger-than-expected quarterly results.
Cisco Systems also rose 4.8 percent on strong earnings and investor optimism about its artificial intelligence outlook.
Foot Locker surged 85.7 percent after Dick’s Sporting Goods announced it would acquire the company for US$2.4bn. Dick’s shares dropped 14.6 percent despite posting better-than-expected quarterly profit.
Commodities saw mixed movements.
Crude oil for July delivery fell US$1.53 to US$61.15 per barrel amid speculation that a potential US-Iran nuclear deal could boost global oil supply. Natural gas for June dropped 13 cents US to US$3.36 per mmBTU.
Gold for June delivery rose US$38.30 to US$3,226.60 an ounce. Copper for July increased three cents US to US$4.68 per pound.
The Canadian dollar traded at 71.51 cents US, down slightly from 71.61 cents US on Wednesday.
In global markets, Chinese stock indexes declined with Hong Kong falling 0.8 percent and Shanghai down 0.7 percent.
The Chinese Commerce Ministry accused the Trump administration of violating world trade rules by restricting use of Ascend chips made by Huawei Technologies, demanding the US “immediately correct its wrong practices.”
In a speech on Thursday, US Federal Reserve Chair Jerome Powell said the world “may be entering a period of more frequent, and potentially more persistent, supply shocks,” posing a “difficult challenge for the economy and for central banks.”
