Wall Street Week Ahead

Investors eye critical trade negotiations and impressive Q1 earnings as markets reopen after Good Friday, with Tesla, Google, and Boeing reports on deck amid rising retail spending and mounting recession concerns.

Apr 20 2025

Wall Street is set to return to trading after investors enjoyed a break on Good Friday. Investors are closely watching trade negotiations between Trump and world leaders, analyzing strong retail sales data, and monitoring emerging signs of a potential recession. Meanwhile, earnings season ramps up with major reports expected from Tesla, Google, Intel, and Boeing.

Wall Street Returns Amid Trump's Trade Talks, Strong Retail Sales, and Early Recession Signs

Trade Wars and Negotiations

The trade war and tariffs initiated by Trump continue to cast significant shadows over the market. However, recent days have seen the start of negotiations between Trump and leaders of several countries, hoping to reach agreements that might moderate the high tariffs announced by the American president earlier this month.

Last week's retail sales data for March showed a 1.4% increase, exceeding the expected 1.2% rise. This suggests Americans may be purchasing products now before tariffs take effect and drive prices higher. This monthly increase represents a two-year high, with a significant portion attributed to accelerated car purchases ahead of tariffs, which alone contributed about 1% to the monthly growth in retail sales. Excluding automotive sales, monthly growth stood at just 0.5%.

Additionally, building and gardening product purchases surged by 3.3% this month, following a 0.4% decline last month, likely in response to tariffs announced on Canada and Mexico in early February.

Even if all countries except China reach agreements with the U.S. administration, import tariffs will remain at current levels, representing a shock of 20%-25% (the expected average tariff rate) directly affecting approximately 15% of domestic demand. The impact of tariffs will extend beyond their direct tax effect, penetrating various sectors that don't directly import goods and causing price increases in unrelated areas. For example, used car prices in the U.S. have already risen by about 2.5% in the last three months, despite new car prices not yet increasing.

Earnings Season

Alongside macroeconomic factors influencing markets, several major companies are expected to report their first-quarter results this week:

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Tesla will report on Tuesday after market close, with expected revenue of $21.81 billion and earnings per share of $0.43

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Google will report on Thursday after market close, with expected revenue of $93 billion and earnings of $2.1 per share

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Intel will report around the same time as Google, with expected revenue of $12.2 billion and earnings of $0.1 per share

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Boeing will report on Wednesday before market open, with expected revenue of $18.5 billion and earnings of $0.15 per share

"More than a tenth of S&P500 companies have reported so far, with 71% recording higher-than-expected profits and 61% reporting higher-than-expected revenues," wrote Sandeep Rao, research analyst at Leverage Shares. "Companies are showing impressive results but raising questions about the future. Banks reported strong results but almost all predicted a global recession is inevitable—creating relatively shaky market sentiment. This duality is expected to continue throughout earnings season."

"Trade tensions aren't likely to diminish soon, perhaps the opposite," adds Rao. "The semiconductor sector is among the most affected by the trade war. On one hand, China is restricting exports of minerals essential for chip production, while the U.S. is limiting chip sales from companies like Nvidia to China. Nvidia had to announce a $5.5 billion sale last week due to tightened export restrictions to China, though this estimate may be too conservative."

"This is a unique earnings season," writes Paul Marino, Revenue VP at American investment company Themes ETF's. "Typically, companies' future forecasts are the focus. However, due to significant uncertainty around the trade war, companies struggle to provide binding forecasts for the coming months. Nevertheless, financial companies have shown strong results and are expected to perform well regardless of conditions. Trump expressed optimism last week that a deal with China would be signed in the coming weeks."

In the semiconductor sector, everyone knows China operates unfairly, but the question is what 'pain' companies will endure until the issue is resolved. A deal with China could signal significant market recovery, especially among the 'Magnificent Seven, adds Marino.

Several defense companies, including Lockheed Martin, will be in focus this week. With the ongoing war in Ukraine, American and European defense stocks are expected to perform well.

Google's reports this week and Microsoft's upcoming reports will allow investors to examine whether market uncertainty is leading to reduced capital investment from major cloud companies.

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Please note that the article should not be considered as investment advice or marketing, and it does not take into account the personal data and requirements of any individual. It is not a substitute for the reader's own judgment, and it should not be considered as advice or recommendation for buying or selling any securities or financial products.