Jack Dorsey Issues Clear Warning as Block Shares Reel

Stock futures pointed to a lower open when equities begin trading on Tuesday. With no market-moving economic data being released in the morning and no Fed speakers, the drivers of the market will be reactions to quarterly results from Monday night and Tuesday morning, and anything new on the tariff and trade front. This means we are in a bit of a holding pattern ahead of tomorrow’s Fed policy meeting outcome.

Like most others, we do not expect the Fed to deliver a rate cut exiting that meeting. Unlike many others, we expect Fed Chair Powell to deliver some sobering comments about the prospect of rate cuts in 2H 2025. Bolstering our view for that is recent April data that showed the U.S. economy continues to grow, albeit at a slightly slower pace, and inflation pressure perked up during the month. The culprit: tariffs.

In response to that data over the last few days, we’ve seen the market soften somewhat in its view on the number of rate cuts, with the CME Fed Watch Tool now showing three cuts between June and December, down from four last week. That’s still more than the two the Fed telegraphed back in March before the start of Trump’s push with reciprocal tariffs.

Ford Motor: Tariffs, Pulled Guidance and Supply Chain Warning

We saw the impact of tariffs in quarterly results last night from Ford Motor F. While the company bested market expectations for its March quarter, Ford was the latest to join the growing list of those suspending their guidance. It also shared expectations to take a $2.5 billion hit this year due to, you guessed it, tariffs.

Ford also discussed “the potential for industrywide supply chain disruption impacting production.” We’re hearing more and more about this, especially when it comes to falling port and airfreight traffic from Asia.

While it may not be as severe as it was during the pandemic, we are expecting certain sectors of the market, like retail, to face supply shortages. That, paired with the impact of higher costs due to tariffs, suggests we should brace for higher prices in the coming days and weeks. At the same time, signs that the consumer is becoming increasingly selective in their spending continue.

Block Brings a Warning for Retail Earnings

Following the company’s quarterly results that sent its shares reeling, Block XYZ CEO Jack Dorsey said there was a pronounced shift in consumer behavior this year.

“This coincided with inflows coming in below our expectations," he said. "During the quarter, non-discretionary Cash App Card spend in areas like grocery and gas was more resilient, while we saw a more pronounced impact on discretionary spending in areas like travel and media. We believe this consumer softness was a key driver of our forecast miss.”

This speaks to our investment thesis behind Costco COST and Amazon AMZN, and it’s also another reason to be wary as the current earnings season shifts to retail-facing companies. It will also have us eyeing results and guidance from Uber UBER, Walt Disney DIS, and Tapestry TRP this week, as well as those from Walmart WMT, Kohl’s KSS, Target TGT and others in the coming ones.

Getting back to tariffs, while the market is hoping for some progress, President Trump injected yet another round of uncertainty into the mix.

On Monday, it was on movie production, and on Monday night Trump said he will announce pharmaceutical-specific tariffs within the next two weeks. For some context, data from EY found that in 2023 alone, the U.S. imported $203 billion in pharmaceutical products, with 73% coming from Europe, primarily Ireland, Germany and Switzerland. While the argument is for the re-shoring of capacity, it may not take as much time as it will for auto manufacturers, but it will still take time.

Coming Up: Palantir

Coming up, we’ll dig into Palantir’s PLTR earnings report from Monday night, one that, as we suspected, has the shares moving lower on Tuesday morning. Were there several positives in the report? You bet there were. More coming up shortly.

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At the time of publication, TheStreet Pro Portfolio was long COST, AMZN and PLTR.