Wall Street uncertainty reached a whole new level in the past week after a slew of S&P 500 companies cancelled their full-year earnings guidance due to President Donald Trump’s tariffs.
Financial advisors, however, don’t seem to mind flying blind. At least for the time being.
Ford Motor (Ticker: F) suspended its annual guidance Monday because of the lack of clarity surrounding Trump's tariffs. During it’s first quarter earnings call, the company said the levies would cost it about $1.5 billion in adjusted earnings before interest and taxes.
"It's still too early to fully understand our competitors' responses to these tariffs," Ford CEO Jim Farley told analysts. "It's clear, however, that in this new environment, automakers with the largest U.S. footprint will have a big advantage."
Toymaker Mattel (Ticker: MAT) also paused its full-year 2025 guidance Monday, joining airlines UPS (Ticker: UPS), American Airlines (Ticker: AAL) and Delta (Ticker: DAL), who all recently did the same. United Airlines (Ticker: UAL) went so far as to offer two sets of outlooks - one for a stable macroeconomic environment and one for a recession.
Tim Holland, chief investment officer at Orion, for one, has sympathy for the folks at S&P companies pulling their earnings guidance due to all that’s going on in Washington, adding he is "not surprised" to see them take such defensive actions. Still, Holland maintains the lack of guidance or diminished guidance isn’t impacting how he is allocating capital on behalf of clients.
“Those dynamics are simply making other economic data, particularly data around US consumer spending and US jobs, that much more important. For now, the US consumer and the US economy are quite impressively holding up quite well in the face of almost unprecedented economic uncertainty,” Holland said.
Similarly, Steve Kolano, chief investment officer at Integrated Partners, is not shocked to see companies pulling guidance and indeed had been expecting this to occur. In fact, he has been warning clients and advisors of such actions in the face of significant uncertainty related to both tariffs and their resulting impact on underlying businesses. Despite his caution, he has not been changing how he invests money on behalf of clients.
“We believe businesses will adjust their business models as more clarity is gained from tariff implementation,” Kolano said. “In the shorter term, there may be very attractive opportunities in the market for clients to take advantage of, as markets continue to discount a broad range of outcomes.”
Meanwhile, Jeremy Zuke, financial planner at Abundo Wealth, said stocks should be considered 10 plus year, long-term investment instruments. As a result, he pays no attention to announcements by individual companies about their short-term earnings prospects or guidance.
“Our portfolios are buy-and-hold low-cost index funds established based on the client's need, ability, and willingness to take risk. With proper allocations to cash, bonds, and global stock funds, the biggest benefit to the investor is that they can 'tune out the noise' and stick to their well-thought-out plan,” Zuke said.
Robert Pearl, co-founder and wealth advisor at G&P Financial, said that it makes sense for companies to cut guidance given the tariff uncertainty. If the outlook is unclear, putting out guidance just to meet expectations can do more harm than good, according to Pearl, adding it does not affect the way he invests. What’s been refreshing, in his opinion, is that the market has not punished these companies for pulling back on guidance.
“That’s a big shift,” Pearl said. “Long term, this could actually be a tailwind for stocks because it gives companies more flexibility and, for some, a chance to reset the narrative when they bring guidance back.”
Elsewhere, David Abella, director of investments at GoalVest Advisory, was not surprised to see companies pull their guidance given the high market volatility seen in April. In his opinion, it is not a cause to panic but “not a builder of market confidence, either.”
“Generally companies have suspended guidance in the past, but this level is very unusual and highlights the rocky road ahead. On a positive note, markets have absorbed the suspension of guidance in a very measured manner,” Abella said.
Abella points out he has been cautious since the tariff issue emerged, so the elimination of guidance reinforces his caution. That said, he still sees signs of encouragement from the market.
“The economy and U.S. consumer is quite resilient and earnings for the quarter are off to a solid start. We are cautious towards companies that are cyclical or tariff exposed and most of the companies that have pulled guidance are not companies that we would be invested in,” Abella said.
Finally, Matthew Gaffey, president of Corbett Road Wealth Management, is among those taking the earnings uncertainty in stride. He points out this is not the first time a slew of publicly traded companies suspended their guidance due to market uncertainty or volatility, and he predicts it won’t be the last. For example, Gaffeys highlights the COVID pandemic as a time when several large companies including Apple (Ticker: AAPL), Disney (Ticker: DIS) and Coca-Cola (Ticker: KO) paused forward guidance, as well as the 2008 financial crisis.
“Taking politics out of the picture, you will see that this is not unheard of. What it does is give you is a little insight into the individual companies and their lack of faith in their ability to predict the true impact of major market factors,” Gaffey said.
Gaffey added that the lack of clarity does not change how he approaches investing or planning for his clients.
“We think diversifying investments and investment styles or strategies provides a better approach that has the ability to be more adaptive or responsive to a variety of market conditions. Planning for the certainty of uncertainty is critical when looking forward with the people we have relationships with,” Gaffey said.
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