Stable jobless claims and erratic tariffs cloud market outlook
The latest U.S. jobless claims showed virtually no change, with just a slight uptick to 222,000, and continuing claims dropped to a three-month low. For all the corporate hand-wringing and market anxiety, the labour market remains impressively resilient. Since late 2021, weekly claims have been stuck in a narrow band, immune to panic headlines about slowing growth. Behind the scenes, businesses may be pulling back on guidance, but they aren’t laying off workers just yet.
On the trade front, President Trump’s tariff machine is back in gear, and the messaging is as erratic as ever. Over a few days, we went from the White House saying there was no timeline on tariff relief, to Trump suggesting tariffs could come down soon—depending on how talks with China evolve. Then came the threat of higher car tariffs on Canadian imports, just as reports emerged he’d spare automakers from some of the harsher measures. All told, it’s been another week of mixed signals, with more than 90 countries allegedly in contact with the U.S. over tariff policy. Good luck keeping track.
Amid this policy noise, PepsiCo quietly broke a very long streak, missing earnings estimates by just a penny—but the symbolism is still strong. The company cited trade war uncertainty and weakening consumer sentiment as the key culprits. For a firm known for delivering reliably, this rare stumble paints a clear picture of just how tricky the macro backdrop has become. Pepsi’s Chief Executive Officer Ramon Laguarta flagged “volatility and uncertainty around global trade” as ongoing challenges. While Pepsi cut its earnings per share guidance, it held firm on shareholder return targets, echoing a trend among many U.S. corporates: pull back on guidance, stay the course operationally.
The market action so far has been quite forgiving. The message is that it’s tough out there, so we are giving a bit of a pass to some of the weaknesses seen in guidance and economic expectations. It remains to be seen how long this attitude will last.
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