Wall Street drifts lower, still set for best month since late 2023 amid mixed earnings

Wall Street drifted lower Friday morning as investors weighed a mixed batch of corporate earnings and ongoing uncertainty surrounding former President Donald Trump’s shifting tariff policies. Despite the day’s dip, the market remained on track to close out what could be its best month since November 2023.The S&P 500 slipped 0.2% in morning trading. The Dow Jones Industrial Average ticked up 13 points, or less than 0.1%, as of 10:10 a.m. Eastern time, while the Nasdaq composite fell 0.5%.Shares of Gap Inc. dragged on the market, plunging 21.1%, even after the retailer reported better-than-expected profit and revenue. The company, which owns Banana Republic and Old Navy, warned that tariffs on imports from China and other nations could add up to $300 million in costs this fiscal year. While Gap has plans to mitigate about half of that impact, the warning spooked investors.Markets have spent much of the week reacting to the latest developments in the White House’s tariff policy. Earlier optimism that Trump’s tariffs might be easing helped fuel a rally, especially after a U.S. court blocked many of the levies on Wednesday. That helped push the S&P 500 toward its first winning month in four and potentially its strongest since late 2023.However, the situation remains uncertain. The White House is appealing the U.S. Court of International Trade’s ruling, keeping many of the tariffs in place for now. Tensions flared again Friday morning after Trump accused China of failing to uphold its end of the tariff pause agreement. “So much for being Mr. NICE GUY!” he posted on Truth Social.The comments briefly rattled markets, but futures soon stabilized. Many analysts believe Trump may seek alternative legal routes to continue applying tariff pressure.Trump argues that tariffs are essential to revitalizing American manufacturing, even if households and businesses feel short-term pain. The uncertain outlook has already prompted some companies to pull back. American Eagle Outfitters, for example, withdrew its financial forecast for 2025, citing economic ambiguity. Its stock fell 1.4% after it reported a steeper-than-expected quarterly loss.On the upside, Ulta Beauty shares surged 14.8% after reporting strong sales and raising its full-year revenue outlook, despite describing the business climate as “fluid.” Costco also edged higher, climbing 3.7%, after beating earnings expectations.Red Robin Gourmet Burgers rocketed 69% after surprising investors with a quarterly profit, while SharpLink Gaming extended its meteoric rally, rising 19.5% on Friday to bring its weekly gain to 1,308%. The marketing company, which connects consumers to sportsbooks and casino platforms, announced a $425 million plan to invest in Ethereum-based cryptocurrency ventures.Meanwhile, bond markets were calm. The 10-year Treasury yield dipped to 4.40% from 4.43%, while the two-year yield held steady at 3.92%, reflecting investor expectations that the Federal Reserve may hold rates steady for a while longer.A separate report from the University of Michigan showed that consumer sentiment improved slightly in May, especially after Trump paused many of his proposed tariffs on China. Still, Americans remain anxious. “Overall, consumers see the outlook for the economy as no worse than last month, but they remained quite worried about the future,” said Joanne Hsu, director of the Survey of Consumers.The Fed has so far held its benchmark borrowing rate steady in 2025 after a round of cuts late last year. Officials have indicated they want more time to assess the inflationary impact of tariffs before making further decisions.Global markets showed mixed movement. In Europe, France’s CAC 40 rose 0.3%, Germany’s DAX climbed 0.8%, and the UK’s FTSE 100 added 0.6%.In Asia, Japan’s Nikkei 225 dropped 1.2% to 37,965.10 after inflation data from Tokyo showed core prices rising faster than expected, fueling speculation that the Bank of Japan may raise interest rates.Australia’s ASX 200 gained 0.3%, while South Korea’s Kospi slipped 0.8% ahead of next week’s presidential election. Hong Kong’s Hang Seng lost 1.2% and China’s Shanghai Composite shed 0.5%.The trade court’s ruling applies only to some tariffs, leaving those on steel, aluminum, and automobiles—enacted under a different law—unaffected. On Thursday, the US Court of Appeals for the Federal Circuit allowed the president to continue collecting the contested tariffs temporarily while the case proceeds.In energy markets, US crude dipped 7 cents to $60.87 per barrel, while Brent crude fell 10 cents to $63.25. In currency trading, the US dollar weakened to 143.68 yen from 144.12 yen, and the euro edged down to $1.1344 from $1.1367.