By Jamie McGeever
ORLANDO, Florida (Reuters) – TRADING DAY
Making sense of the forces driving global markets
By Jamie McGeever, Markets Columnist
U.S. consumer confidence sinks
What started out as a positive day for world stocks on Tuesday fizzled as the U.S. session progressed, after another steep plunge in U.S. consumer confidence reminded investors of the challenges facing the world’s largest economy.
The MSCI All Country global index hit a near-three week high before easing back when Wall Street got up and running. Perhaps the big surprise was that resilience in tech stocks meant the three main U.S. indices closed the day higher and shrugged off the growing mismatch between the rosy earnings outlook and darkening economic horizon.
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Today’s Key Market Moves
Another vote of consumer no confidence
First the University of Michigan, now the Conference Board.
Two of America’s most closely-watched consumer surveys show that consumers, who account for 70% of all economic activity, are spooked by President Donald Trump’s tariff agenda.
The Conference Board survey published on Tuesday showed that confidence has fallen to the lowest in four years and the expectations index is at a 12-year low, breaching a level associated with an economic downturn.
It doesn’t bode well for growth and, ultimately, corporate profits – more on that below. The tariff situation is extremely fluid as Trump’s April 2 deadline for a whole raft of new duties draws closer, and on Tuesday Europe’s top trade official was due to meet with Trump’s top trade officials for talks.
Trade tensions and tariff fears are also likely to figure heavily in British finance minister Rachel Reeves’ half-year update on the public finances on Wednesday, a budget statement that could see her slash her growth forecasts.
As the latest Conference Board survey shows, tariffs are clearly weighing on U.S. consumer confidence, although less so on the U.S. earnings outlook. That might be about to change though.
Rosy U.S. earnings vista doesn’t match gloomy growth outlook
U.S. economic growth is set to slow this year, perhaps significantly, but no one seems to have told Wall Street. While equity prices and valuations have tailed off recently, analysts are still expecting record-high profits.
In some ways, this is how it should work. Shifts in the economic, political, regulatory or financial environment that affect corporate profitability should be reflected in the stock market well before analysts adjust their longer-term outlooks.
And a re-rating of sorts has already played out. U.S. equity valuations have come off their historic peaks, as the S&P 500 has flirted with a 10% reversal from its record high and the Nasdaq has waded deeper into correction territory. Earnings growth is expected to slow modestly this year.
But profits, which are already at record-high levels, are still expected to keep rising fairly quickly despite the increasingly dour economic growth forecasts. The S&P 500 weighted average earnings per share estimate for 2025 is a record high $269.91, representing growth of around 10% from last year, according to LSEG I/B/E/S. The calendar year 2026 estimate assumes there will be an additional 14% rise.
This suggests the re-rating hasn’t gone far enough.
To read more, click here.
What could move markets tomorrow?
If you have more time to read today, here are a few articles I recommend to help you make sense of what happened in markets today.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
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(By Jamie McGeever, editing by Nia Williams)
