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Tariff Costs Put New Pressure on U.S. Corporate Profits

Rising tariff expenses are beginning to weigh heavily on U.S. companies, prompting executives across multiple industries to warn that profit margins may tighten in the months ahead. Many firms had initially suggested they could manage the added costs through efficiency improvements or selective price increases, but that confidence is fading as import-related expenses continue to climb. Companies that rely on global supply chains are feeling the strain most acutely. Higher costs on imported materials and components are forcing difficult decisions: pass the increases on to consumers, risking weaker demand, or absorb the costs internally, which directly erodes profitability. For many businesses, neither option is attractive. Consumer-facing brands are finding it especially challenging to raise prices further, as shoppers show growing sensitivity to even modest increases. This resistance limits the ability of firms to offset tariff-driven expenses, creating a squeeze that is beginning t...
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S&P 500 Plummets Amid Weak Jobs Report

 


The S&P 500 experienced its worst jobs day since October 2022, as a weak jobs report fueled concerns about the health of the U.S. economy. The index fell by 1.8%, while the Nasdaq 100 and Russell 2000 also saw significant declines, dropping 2.4% and 3.5% respectively.

The disappointing jobs data has intensified fears that the Federal Reserve’s decision to maintain interest rates at a two-decade high could lead to a more pronounced economic slowdown. This sentiment was echoed by Wall Street giants like Citigroup Inc. and JPMorgan Chase & Co., who are now calling for more aggressive Fed action.

The selloff was further exacerbated by a plunge in key technology companies, with Intel Corp. experiencing a 26% drop due to a grim growth forecast. The volatility index, often referred to as Wall Street’s “fear gauge,” hit its highest level since March 2023.

As traders project that the Fed will cut rates by more than a full percentage point in 2024, the market’s focus has shifted from “when and how much will the Fed ease” to concerns about a potential economic downturn. This shift in sentiment has led to increased volatility and a flight from riskier assets.

The latest jobs figures suggest that the Fed’s policies may be cooling the labor market too much, raising questions about whether the central bank has been too slow to act. As the market grapples with these uncertainties, investors are taking money off the table and booking profits, leading to continued near-term volatility.


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