As key companies’ earnings fell short on Tuesday, CNBC’s Jim Cramer said investors have begun to realize that President Donald Trump’s tariffs are having an impact on consumers.
“Long story short: today was a wake-up call,” he said. “The tariffs, even reduced tariffs, are starting to roil things. The consumer’s not spending as much as I thought. There is an acknowledged slowdown there.”
The indexes headed lower during Tuesday’s session, with the S&P 500 closing down 0.30%, the Nasdaq Composite slipping 0.38% and the Dow Jones Industrial Average losing 0.46%. According to Cramer, three household names — UPS, Whirlpool and Stanley Black & Decker — reported “jarring quarters” that demonstrate problems caused by trade turmoil.
Largely seen as a bellwether for the health of the global economy, UPS reported a revenue decline and warned of ongoing macroeconomic uncertainty. “Our sector, specifically the U.S. small package market, was unfavorably impacted by U.S. consumer sentiment that was at historic lows,” management said on the conference call. The company also said manufacturing activity in the country remains soft.
Consumer appliance maker Whirlpool missed estimates and gave below-consensus guidance for full-year earnings — even as management said the company still expects the new duties to eventually help domestic manufacturers like itself. Stanley Black & Decker reported tariff-related supply chain problems and a slower outdoor buying season. The company also said it would take an $800 million hit this year due to tariffs.
To Cramer, these three companies’ results signal that parts of the economy might be softer than many think, and he suggested the Federal Reserve might need to cut rates. He also said it’s hard to dismiss their results as “one-off” after PayPal posted slower transaction growth — and management reported softer retail spending in the U.S. that was most apparent in areas likely impacted by tariffs.
“These companies are experiencing the true worries we had about the tariffs while they were being slapped on earlier this year,” he said. “It’s entirely possible that the negative effects are one-time only and will go away as we get more trade deals, but right now we’re in the thick of it and, you know what, it just doesn’t feel good.”
