Stocks were mixed to higher for much of a trading session defined by optimism about peace in the Middle East. All three main equity indexes finished in the red, though, after The Wall Street Journal reported the Trump administration is considering resuming an effort to force open the Strait of Hormuz.
The front-month West Texas Intermediate crude futures contract was down as much as 5.5% to below $90 per barrel early on Wednesday but settled up more than 2% and above $97.
"Saudi Arabia and Kuwait have lifted restrictions on the U.S. military's use of their bases and airspace imposed after the start of the American operation to reopen the Strait of Hormuz," the WSJ reported, citing officials from the U.S. and Saudi Arabia, "removing a hurdle that had tripped up President Trump's effort to move ships through the vital waterway."
The Trump administration had paused the operation on Tuesday, but is now looking to restart what it calls "Project Freedom" as early as this week.
At the closing bell, the tech-heavy Nasdaq Composite was down 0.1% at 25,806, the broad-based S&P 500 had lost 0.4% to 7,337, and the blue-chip Dow Jones Industrial Average was lower by 0.6% at 49,596.
Paul Tudor Jones: "no chance" of a rate cut
"Do I think he'll cut rates? No chance." That's how legendary hedge fund manager Paul Tudor Jones assesses the probability that Kevin Warsh will do as President Donald Trump wishes and lower the target range for the federal funds rate as soon as he takes over at the most important central bank in the world.
The Senate is expected to approve Warsh's nomination to be the next Fed chair before May 15, when Jerome Powell is scheduled to leave the post. That doesn't mean lower interest rates are coming, though. "Well, I'd be thinking about raising them," Jones said on CNBC. "I'd want to see the data. But I mean, for sure you'd be thinking about it. And I think he's going to be constrained before the election."
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The April jobs report, due out ahead of Friday's open, will provide more color about the employment situation, while the trajectory of inflation remains uncertain due to the war in the Middle East and the lingering impact of President Trump's tariffs.
Meanwhile, although the chair can't cut (or raise!) interest rates all by himself, there are things Warsh can do to change the Fed.
Howmet soars with defense spending
Howmet Aerospace (HWM, +6.3%) extended its year-to-date gains as management of the industrial stock reported first-quarter earnings of $1.22 per share on revenue of $2.3 billion vs a Wall Street forecast for EPS of $1.11 on revenue of $2.2 billion.
Revenue, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), adjusted EBITDA margin and EPS all exceeded the high end of guidance, and free cash flow supported $300 million in stock buybacks amid strong growth across Howmet's key end markets.
CEO John Plant cited a "robust growth outlook," noting that "commercial aerospace OEM customers continue to target production rate increases supported by record backlogs." Plant also said that "defense markets remain healthy" and that the gas turbines market is also "very active."
Howmet expects to report second-quarter EPS of $1.23 on revenue of $2.4 billion and full-year EPS of $4.94 on revenue of $9.65 billion, with the top line boosted by recent acquisitions, including Brunner Manufacturing in February and Consolidated Aerospace Manufacturing in April.
Whirlpool spins 13% lower on dividend suspension
Whirlpool (WHR) was down 12% on Thursday after management of the home appliance maker cut full-year guidance and suspended the consumer discretionary stock's dividend. "War in Iran resulted in recession-level industry decline in the U.S." Whirlpool said (pdf), "as consumer confidence collapsed in late February and March."
Whirlpool reported a first-quarter loss of 56 cents per share vs earnings of $1.70 per share a year ago. Revenue declined 9.6% to $3.3 billion. Wall Street was expecting EPS of 38 cents on revenue of $3.4 billion. Management has announced double-digit price increases and accelerated cost-reduction efforts "to restore profitability." Whirlpool will prioritize debt repayment over paying a dividend for the time being.
"We acted decisively to address pricing and costs in the face of rapid deterioration in macroeconomic conditions," CEO Marc Bitzer said, adding that new tariffs announced in April "in favor of domestic manufacturers" positions Whirlpool "to win with [its] American-made products."
Whirlpool now expects to report full-year EPS of $3 to $3.50 on revenue of approximately $15 billion vs prior guidance for EPS of approximately $6 on revenue of $15.3 billion to $15.6 billion.
