New York
CNN
—
Telling investors what’s coming is a normal part of doing business. But with tariff chaos sown throughout the economy, many major companies are “suspending guidance” entirely.
Corporate America is wading through uncertain waters, stuck in an uncomfortable wait-and-see mode until it becomes clear whether Trump’s broad reciprocal tariffs – which he suspended for 90 days beginning April – will actually happen.
That uncertainty translates into many companies suspending guidance, meaning they have temporarily delayed or paused the release of their earnings forecast. That’s not a great sign for the general state of the world – back in the Covid-19 lockdowns, many companies suspended their guidance because they didn’t want to release inaccurate information as the crisis unfolded.
Suspending guidance poses challenges for analysts, who heavily rely on the forecasts companies issue. And the guidance is a good bellwether for how companies expect the economy to fare.
The same holds true for Trump’s tit-for-tat trade war, which leaves companies unsure whether they’ll have to overhaul their entire business models with its constantly changing headlines.
Other companies have slashed or updated their guidance, the first hint of Trump’s trade war’s effects on the economy’s outlook.
Automaker Stellantis, the parent company of brands like Jeep and Dodge, suspended its forecast for profitable growth this year, saying on Wednesday that it’s too difficult to define the impacts of “evolving” tariff policies. That announcement followed comments from General Motors, which said on Tuesday that it’s no longer standing behind its guidance for higher profits in 2025 because it did not take into account potential tariff impacts. And even German stalwart Mercedes-Benz said it would be suspending its guidance.
In tech, shares of the social media platform Snap plunged up to 14% Tuesday when it announced it was withholding guidance in the second quarter. The company blamed uncertainty in the macroeconomic environment potentially impacting advertising demand.
And gone are the days of post-pandemic revenge traveling. American Airlines, Delta, Southwest and Alaska Air have all pulled their financial guidance for the year because of swirling uncertainty.
Delta Air Lines CEO Ed Bastian warned the American economy could fall into a recession, as the legacy airline announced “growth has largely stalled.”
“We believe it is mostly our most price-sensitive customers, for whom travel is most discretionary,” he said.
Last week, American Airlines vice chair Steve Johnson also told analysts that lower-income Americans are flying less.
And while not every company is suspending their guidance entirely, the uncertainty is making some warn that they could do so in the near future. UPS, for instance, said it would not be dropping its guidance for the moment, but warned it could do so soon.
“There’s so much uncertainty in the back half (of the year), because all those (tariffs) will ultimately impact the US consumer,” UPS CEO Carol Tome said. “Current consumer sentiment is down from where it was at the beginning of the year. (But) the consumer is still pretty healthy.”
It’s a “huge deal” when companies pull guidance, Paul Beland, CFRA’s Global Head of Research, said to CNN.
“It raises uncertainty significantly and that’s something we’re seeing a lot of,” he said, referring to indicators like consumer sentiment.
And while valuations are still lofty for companies in the S&P 500, expectations for their earnings growth have fallen over the past 6 months, he said.
There are parallels between the pulled-back guidance during the height of the Covid-19 pandemic and now – like the pandemic, tariffs are creating a supply chain shock that is hard to predict.
But while the Federal Reserve was printing more money and the government was issuing stimulus checks during the pandemic era, “we just don’t have that security blanket from the Fed to come to the rescue” this time, according to Beland.
Now “we’ve got a government that is trying to do it’s best to bring down the deficit and a we’ve got a Federal Reserve that’s still fighting inflation,” Beland said.
CNN’s Nathaniel Meyersohn, Chris Isidore and Olesya Dmitracova contributed to this report.
