The daily business briefing: May 31, 2019
Trump threatens to hit Mexico with tariffs over illegal immigration, Uber shares rise as losses match expectations, and more
- 1. Mexico will send D.C. delegation to talk Trump out of tariffs
- 2. Uber shares rise after quarterly loss matches expectations
- 3. Stock futures fall as Mexico, China trade tensions intensify
- 4. Fed official: Inflation, global risks could justify rate cut
- 5. Gap shares drop after weak quarterly report
1. Mexico will send D.C. delegation to talk Trump out of tariffs
President Trump on Thursday said he would impose a 5 percent tariff on all Mexican imports starting June 10, and that the tariffs would rise another 5 percent each month, to a 25 percent cap, unless Mexico "substantially stops" the flow of undocumented immigrants into the U.S. On Friday, Mexican President Andrés Manuel López Obrador said his foreign minister would lead a delegation to Washington, D.C. to talk Trump out of the decision. Bipartisan senators also reminded Trump that tariffs would harm the American economy and his chances of passing a trade deal with Mexico and Canada. The Dow Jones Industrial Average, Nasdaq, and S&P 500 all dipped the morning after Trump's announcement, and each closed down more than a percentage point on Friday.
The New York Times The White House
2. Uber shares rise after quarterly loss matches expectations
Uber's stock rose in after-hours trading on Thursday after the ride-hailing company reported a quarterly net loss of $1.01 billion, in line with analysts' expectations. The company, reporting earnings for the first time since its IPO, reported revenue of $3.10 billion, narrowly beating the Refinitiv estimate of $3.04 billion. Uber shares moved little immediately after the report, but gained more than 3 percent during executives' conference call with analysts. On the call, Uber CEO Dara Khosrowshahi said Uber Eats could grow significantly, with the food delivery service possibly overtaking ride sharing some day in what "would be an enormous win for us."
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3. Stock futures fall as Mexico, China trade tensions intensify
U.S. stock index futures plunged early Friday as President Trump's threat to slap tariffs on Mexican imports over illegal immigration added to fears that trade tensions would hurt the economy. Futures for the Dow Jones Industrial Average and the S&P 500 fell by about 1 percent, while those of the Nasdaq dropped 1.3 percent. Shares of U.S. automakers, which build some vehicles in Mexico, fell by about 5 percent. Trump's surprise tariff announcement came as investors were already concerned that the U.S.-China trade war could tip the U.S. economy into recession. Shortly after the Mexico news, Hu Xijin, editor of the pro-government Chinese tabloid Global Times, tweeted that "China will take major retaliative measures against the U.S." for blacklisting Huawei and other Chinese companies.
4. Fed official: Inflation, global risks could justify rate cut
The Federal Reserve might consider cutting interest rates or other moves to boost the economy if President Trump's trade war with China continues to intensify and threaten global economic growth. The U.S. central bank has already taken a cautious approach and stopped a series of slow rate hikes as it confronted low inflation, which has held just below the Fed's target rate of 2 percent. "If the incoming data were to show a persistent shortfall in inflation below our 2 percent objective" or that global economic and financial developments increased "downside risk," Fed officials would take that into account when considering whether to keep interest rates unchanged, the Fed's vice chair, Richard Clarida, said during a New York speech on Thursday.
5. Gap shares drop after weak quarterly report
Gap shares plunged by 15 percent in pre-market trading on Friday after the clothing retailer reported quarterly earnings and sales that fell short of analysts' expectations. The company's shares had already hit a three-year low at Thursday's close. CEO Art Peck said the last quarter was "extremely challenging," and that the company was "committed to improving our execution and performance this year." He said the poor performance was partly due to one of the "coldest, wettest quarters in memory," which discouraged many shoppers from venturing out. Gap also is struggling against competition from lean rivals like Zara. Other apparel retailers, including Canada Goose, Abercrombie & Fitch, and J.Jill, also reported poor earnings.
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Harold Maass is a contributing editor at The Week. He has been writing for The Week since the 2001 debut of the U.S. print edition and served as editor of TheWeek.com when it launched in 2008. Harold started his career as a newspaper reporter in South Florida and Haiti. He has previously worked for a variety of news outlets, including The Miami Herald, ABC News and Fox News, and for several years wrote a daily roundup of financial news for The Week and Yahoo Finance.
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