For Boeing, GM, Trump And Juncker's Talks Provide A Needed Respite

After its second quarter print Wednesday, Boeing Co BA slipped 3.4 percent before recovering to end the day nearly flat. General Motors Company GM fell 8.8 percent on its earnings before recovering slightly.  Both companies beat profit expectations in the reported periods. So what was the issue? It's simple: unpromising outlooks for the rest of the year caused by rising costs, tariffs, and trade worries.

Though Boeing beat analysts' estimates on both the top and bottom line, its post-earnings slump pulled down the Dow Jones Industrial Average.

Boeing said its sluggish earnings guidance can be attributed to the rising cost of the KC-46 Tanker. This isn't very surprising, considering how, due to trade tensions, input costs have been rising for many companies that use steel or aluminum.

General Motors' guidance didn't seem to be too promising looking either. The company didn't specifically mention tariffs in its press release, but it is highly likely that some of the rising costs it was referring to have to do with the tariffs.

GM also said it expects higher commodity costs and the dollar rally to be hinder its financials as the year moves along. Of course, rising input costs and ongoing trade disputes are also a big factor for the auto giant — especially considering recent threats that both sides of the pond would impose auto tariffs.

However, some good news came along that has potentially changed the companies' fates. Hours after both companies reported, President Donald Trump and European Commission President Jean-Claude Juncker extended an olive branch to these intensifying trade tensions.

Trump agreed not to impose tariffs on European autos as long as negotiations keep on coming along. In response, the E.U. said it would try to move away from not purchasing U.S. natural gas and soybeans entirely. Steel and aluminum tariffs will remain in place for now, though.

While this shed some positive light on the aforementioned companies, nothing is set in stone. Any renewed hopefulness will still take some time to consolidate, and the threat of escalation is still present.

Investors will be watching carefully to see how any firm agreement between the U.S. and EU will affect companies like GM and Boeing. The trade war with China is still tense, but a combined front from the West could bode well longer-term.

Related Links:

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