P.M. Edition for April 22. Major U.S. indexes rose 2.5% or more today as the Trump administration offers fresh hope for de-escalation of the president’s trade war. Plus, Tesla’s net income fell more than 70% in the first quarter as the company struggled with competitive pressure and Elon Musk’s polarizing role. And the International Monetary Fund expects slower growth for the global economy. Economics editor Paul Hannon joins to discuss why the IMF predicts that the U.S. is expected to be hit particularly hard. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What are the key highlights of today's stock market?
U.S. stocks bounce back, lifted by optimism from the White House on tariff negotiations. Plus, dealmakers struggle to make sense of Trump's antitrust policy. And the International Monetary Fund anticipates that global economic growth will slow, with the U.S. hit particularly hard.
Their problem is to do with protecting businesses in such a way that everybody gets a little bit kind of lazy and complacent. And that dynamism that the U.S. economy in particular is renowned for ebbs away, maybe slowly, maybe very quickly.
It's Tuesday, April 22nd. I'm Alex Osola for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. U.S. shares rebounded today, with big tech stocks regaining some of the ground they lost yesterday. Traders were cheered by optimism from the White House on tariff negotiations.
Chapter 2: How is the trade war impacting U.S. businesses?
According to people familiar with the matter, Treasury Secretary Scott Besant said at an investor summit that he expects the trade war with China to de-escalate and believes a deal can be reached. The bounce-back came despite fresh fallout from the Trump administration's tariffs.
Defense contractors were among the biggest losers in the S&P 500 today, after several of the industry's biggest names reported results. Aerospace and defense specialist RTX said it expects to take an $850 million hit to operating profit from tariffs this year, without factoring in the higher reciprocal tariffs that the Trump administration has put on pause.
Chapter 3: What is Tesla's financial situation this quarter?
Northrop Grumman slashed its full-year profit outlook, while Lockheed Martin kept guidance steady. The Dow rose more than 1,000 points, or 2.7 percent. The S&P 500 was up 2.5 percent, and the Nasdaq closed 2.7 percent higher. Gold retreated after surging earlier today to a new record high, above $3,500 a troy ounce.
And reporting after markets closed, Tesla saw its net income slide 71 percent in the first quarter as the company struggled to overcome competitive pressure overseas and a reputational hit from CEO Elon Musk's polarizing role in the Trump administration.
Tesla revenue fell also in the first quarter following a steep decline in automotive sales, including double-digit percentage drops in key markets including the U.S., China, and Germany. Tesla reported about $19 billion in revenue for the quarter, down 9% compared to the same period last year. It's been a slow period for mergers and acquisitions.
According to data from the London Stock Exchange Group, or LSEG, February marked the first time in 25 months that no deal valued over $10 billion was announced globally. And April's been quiet, too. Some of that reticence is due to economic uncertainty from President Trump's tariff war and his threats to fire Federal Reserve Chair Jerome Powell.
Chapter 4: Why is M&A activity slowing down?
But dealmakers say uncertainty about approvals will persist even if the market calms down, as they struggle to make sense of Trump's antitrust policy. Lead deals reporter Lauren Thomas joins me now. Lauren, what are some signs that are giving dealmakers some hope here?
When the Biden administration turned over, you had one individual in particular, Lina Khan, was kind of notoriously against, you know, monopolies and really the idea of M&A in general. And so with her moving on, there was...
This celebration across Wall Street, and in particular down in D.C., an expectation that concerns around antitrust were going to lighten up and that there would be a wave of M&A under Trump. And of course, this hasn't materialized. What's giving people hope, though, is now we have these new faces, both in the FTC and the DOJ.
In the FTC, you have Andrew Ferguson, the chair of that organization, and then And the DOJ, the head of the antitrust division, Gail Slater, says lawyers and bankers and companies are getting to know these individuals better. There's more clarity around just what they're thinking and how they're going to look at deals. It's kind of like time heals all wounds.
So we haven't had many deals yet to really be a test case. There's still some question marks. Generally, yes, you'd see a lull at the start of a new administration. But once you get a couple months into it, everyone's more comfortable with, like, Ferguson and Slater, for example.
You know, there haven't been as many big deals this year as you mentioned, but there have been a few. One of the big ones was Capital One acquiring Discover for $35 billion. That got the go-ahead from regulators. But there's one deal that's expected to provide a bit of a litmus test with regulators, right? And that's Google's acquisition of Wiz for $32 billion.
So that happened in March, and it's still awaiting clearance from regulators. What are dealmakers looking to learn here?
What's so interesting, of course, about that deal is just in and of itself, it's a tech deal. And big tech, Ferguson himself and Slater, too, like everyone's always looking at big tech and they are more under the spotlight than other industries. And so that will certainly test just the appetite in general for big tech. tech deal. Alphabet is already facing its own challenges elsewhere.
And then it goes and does a deal. What's interesting about that deal, of course, the company tried to frame it as this is not us like buying another business where we're going to just take more market share. And so it tried to frame the deal as something that's good for national security just in general here in the U.S. So it'll be interesting to see that one.
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Chapter 5: What are the predictions from the IMF about global growth?
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The sharp rise in tariffs since the start of the year marks the onset of a new era that will see most economies grow more slowly than previously expected. In its quarterly outlook on the world economy out today, the International Monetary Fund projected the global economy to grow 2.8 percent this year, down from 3.3 percent. According to the IMF, the U.S.
is forecast to suffer one of the largest hits to its prospects, with growth in 2025 now expected to be 1.8 percent, down from a January forecast of 2.7 percent, and with the inflation rate expected to be one percentage point higher than anticipated this year. These forecasts are based on tariffs announced through April 2nd, before the 90-day pause that President Trump announced.
For more, I'm joined by economics editor Paul Hannon. Paul, why is the IMF expecting the U.S. to be hit particularly hard?
Well, there are two things going on. One is the tariffs themselves, they make imports more expensive. So for a lot of businesses, it's just going to become more costly to produce the stuff that they produce. And then it will become more difficult for them to find buyers. And then there's a kind of more general feeling of uncertainty about where exactly the US is going this year.
And when businesses see a lot of uncertainty, what they tend to do is sort of freeze or pause decisions to invest or hire people. This, you know, sense of not really knowing how things are going to roll out in the next sort of nine months or so.
The Trump administration has said that higher tariffs will ultimately benefit the U.S. economy since they'll help bring back manufacturing. Does the IMF see globalization as an issue?
They acknowledge that a lot of people feel pretty bad about the loss of factory jobs, but they argue that this is more to do with technological change, automation, the introduction of robots.
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