Investors are grappling with the latest developments in the U.S.-China trade conflict, as a staggering 104% tariff on Chinese electric vehicles and various tech goods took effect overnight. This renewed trade tension has added to the anxiety surrounding a busy day of earnings reports from major companies, including Delta Air Lines and Constellation Brands, while also raising concerns about the economic outlook from retail giants like Walmart and Apple.
The impact of the new tariffs was immediately felt in the stock market, particularly among the Magnificent Seven tech stocks. In premarket trading on Wednesday, shares of Tesla (TSLA) fell by 1%, while Apple (AAPL) experienced a 2% decline. Other tech giants, including Amazon (AMZN), Microsoft (MSFT), and Nvidia (NVDA), also saw their stock prices dip. The combination of escalating trade tensions and rising bond yields has weighed heavily on growth stocks, reversing much of the momentum the sector had gained in 2025.
Bond yields surged on Wednesday, with the 30-year Treasury yield surpassing 4.75%, marking its highest level since mid-February. Economist Peter Schiff commented on the situation, stating, “If Trump’s secret agenda is to crash the stock market to bring down long-term interest rates, the plan already failed. The plan to crash the stock market is now crashing the bond market too.” This sentiment reflects the growing unease among investors as they navigate the complexities of the current economic landscape.
Delta Air Lines reported better-than-expected earnings, posting an adjusted earnings per share (EPS) of $0.46, exceeding Wall Street’s expectations of $0.38. The airline’s adjusted revenue reached $12.98 billion, matching forecasts, while net income surged to $240 million, up from $37 million a year earlier. Despite these positive headline numbers, Delta announced plans to reduce flight capacity in the second quarter, citing rising costs and shifting travel patterns. This cautious approach signals the airline’s intent to restore operational reliability while managing fuel and labor expenses more tightly.
In the beverage sector, Constellation Brands, known for its popular brands like Corona and Modelo, is set to report earnings after the bell. Analysts anticipate an EPS of $2.27 on revenue of $2.12 billion. Investors will be keen to hear insights regarding U.S. beer and wine sales, as these consumer staples often reflect household confidence during periods of economic stress. With inflation lingering and real wages cooling, Constellation’s results could provide valuable clues about consumer behavior.
Retailers are also feeling the pressure from the new tariffs. Walmart announced it would withdraw its Q1 guidance due to uncertainty surrounding the recently imposed tariffs on Chinese goods, particularly electric vehicles and consumer electronics. This decision underscores the challenges that even the most dominant U.S. retailers face in navigating unpredictable trade policies.
Meanwhile, Big Lots, which has seen a significant decline in its market position, is set to report earnings today. Once a national discount powerhouse, Big Lots was delisted from the NYSE late last year and now trades as a penny stock. Its struggles are emblematic of the broader “retail wreckage” affecting the industry, with other retailers like Macy’s and Foot Locker shuttering hundreds of stores across the country.
As the earnings season progresses, attention will turn to the upcoming results from major banks, including JPMorgan Chase and Wells Fargo, scheduled for release on Friday. Analysts will be closely monitoring loan growth, consumer credit quality, and recession contingency plans. With expectations for rate cuts pushed further into the year, commentary on margins will be critical in shaping investor sentiment for the second quarter.
In conclusion, the escalation of U.S.-China trade tensions and the introduction of significant tariffs on Chinese goods are creating a ripple effect across various sectors. As investors digest these developments, the focus will remain on corporate earnings and the broader economic implications of these trade policies. The coming days will be crucial in determining how companies and consumers adapt to this evolving landscape.
