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Communication Services was another major laggard, with Warner Bros. Discovery sliding 14% after China announced plans to limit Hollywood imports—further escalating trade tensions and raising concerns over content revenue from international markets.
Autos and Financials Recoil After Downgrades and Trade Fears
Auto stocks reversed sharply as the tariff overhang returned to focus. Stellantis dropped 13% after surging more than 18% in the previous session. Ford and General Motors fell over 5% and 6% respectively, following downgrades from Goldman Sachs and UBS, which cited rising tariff costs and demand risks.
Banks also fell sharply. Goldman Sachs and Citigroup both dropped over 7%, while Bank of America slid 5%. The SPDR S&P Bank ETF fell 7%, underlining the pressure on financials as traders weighed the implications of weaker loan demand and slower business activity tied to trade friction.
Energy Slumps While Defensive Plays Gain Traction
Energy was the worst-performing sector, down nearly 6% as traders grew cautious on global demand. Chevron declined 6.4%, and U.S. Steel lost 7% following Trump’s opposition to a foreign acquisition. Materials and Industrials also declined more than 2%.
In contrast, defensive pockets saw inflows. Consumer Staples rose 0.6%, supported by gains in Coca-Cola and Walmart, while Utilities held slightly positive. UnitedHealth led the Dow with a 3.8% jump, and McDonald’s climbed nearly 0.7% as investors rotated into names with more resilient earnings visibility.
Outlook: Earnings Take Center Stage as Inflation Reports Continue
A cooler-than-expected CPI report provided temporary relief on rate fears, but with PPI and the University of Michigan’s consumer sentiment data due Friday, inflation remains a near-term driver. That said, attention is turning toward corporate earnings, with several major banks reporting Friday morning.
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