Wall Street opened lower on Wednesday, February 5, 2025, as investors digested corporate earnings reports and weighed the impact of escalating trade tensions between the United States and China. (Source: Associated Press, February 5, 2025)
Futures for the S&P 500 declined by 0.4%, while technology stocks pulled Nasdaq futures down by 0.8% before the opening bell. Futures for the Dow Jones Industrials were down 0.1%.
Alphabet, Google's parent company, plummeted by 7.1% after its latest earnings report disappointed investors, who had anticipated stronger revenue growth from the company's cloud business related to artificial intelligence.
Despite exceeding analysts' sales and profit expectations for the most recent quarter, shares of Advanced Micro Devices fell by nearly 10% as revenue from its data centers fell short of Wall Street projections.
Walt Disney Co. shares rose by approximately 1% after the entertainment giant surpassed first-quarter profit expectations, partly due to the box office success of "Moana 2."
Mattel surged by more than 13% in premarket trading after the toy and game maker beat Wall Street's earnings estimates and provided a strong profit outlook for 2025.
Some analysts view the tariffs imposed on China as separate from Trump's actions against other trading partners. Trump may be more inclined to maintain tariffs on China for a longer period, as he did during his first presidential term, to further distance the United States from its geopolitical rival.
Trump is pushing forward with a 10% tariff on U.S. companies importing goods from China. In retaliation, China announced its own tariffs on certain U.S. products and an antitrust investigation into Google on Tuesday.
Media reports on Wednesday suggested that Chinese regulators are considering a similar investigation into Apple's App Store policies. Shares of Apple dropped by more than 2% before the opening bell.
China's 15% tariff on U.S. coal and liquefied natural gas products, along with a 10% tariff on crude oil, agricultural machinery, and large-engine cars imported from the United States, will not take effect until Monday. This provides time for negotiations between Trump and Chinese President Xi Jinping.
"Trade tensions haven't exploded yet, but they're simmering dangerously close to a full boil, and anyone brushing them off does so at their own risk," said Stephen Innes, managing partner at SPI Asset Management.
Trump agreed on Monday to postpone his taxes on U.S. imports of Canadian and Mexican products for a month. Some traders hope that Trump would be discouraged by the damage Wall Street would sustain if a worst-case, long-term trade war were to materialize. Trump has previously cited the stock market as a real-time indicator of his performance.
However, a trade war remains a possibility, and some analysts predict further market fluctuations as Trump's threats should be taken seriously.
At midday in Europe, France's CAC 40 shed 0.2%, while Germany's DAX fell 0.1%. Britain's FTSE 100 was up 0.2%.
Earlier in the global trading day in Asia, Japan's benchmark Nikkei 225 recovered from earlier losses and closed virtually unchanged, finishing up less than 0.1% at 38,831.48.
Among Japanese stocks, Honda Motor Co.'s share price jumped by 8.2% after Japanese media reports indicated that its talks to establish a joint holding company with rival Nissan Motor Corp. were falling apart. Nissan stock tumbled by 4.9%.
Australia's S&P/ASX 200 rose by 0.5% to 8,416.90. The Hang Seng dropped by 0.9% to 20,597.09, while the Shanghai Composite lost 0.7% to 3,229.49.
South Korea's Kospi surged by 1.1% to 2,509.27, as investors identified bargains following recent price declines and found optimism in the overnight Wall Street rally.
In energy trading, benchmark U.S. crude fell by 83 cents to $71.89 a barrel. Brent crude, the international standard, declined by 88 cents to $75.32 a barrel.
The U.S. dollar weakened to 152.91 Japanese yen from 154.30 yen. The euro traded at $1.0420, up from $1.0382.