Wall Street analyst sees ‘no realistic path’ to Trump’s 50% defense spending cuts
Wall Street analysts aren’t buying President Donald Trump’s idea for a massive cut in defense spending.
On Thursday, Trump talked about a potential meeting with Russia and China in the future in which all three would agree to slash military spending. Trump said the U.S. could cut its defense spending by half.
Defense stocks fell on Thursday after the comments, but Wall Street analysts are skeptical of the idea, especially given that some of Trump’s other recent comments have pointed to more defense spending.
“While it is an admirable goal to slash global arms and redirect funds to more productive uses, we see no realistic path. How would these leaders trust each other?” Bernstein analyst Douglas Harned said in a note to clients.
However, analysts were not urging investors to buy the dip.
“Cutting defense spending 50% seems unlikely, although headlines are driving defense stocks for now and today’s news makes us question how much upside comes with FY26 request,” said Wells Fargo analyst Matthew Akers.
One analyst who did not completely dismiss Trump’s comments was Goldman’s Noah Poponak, though even he is projecting only modest budget cuts over the medium term.
“A 50% reduction in the DoD budget would face hurdles. But there have been 30-40% drawdowns in US defense spending multiple times in the past, and the current budget is at its all-time high in absolute nominal dollars, creating a high starting point which makes large percentage reductions mathematically easier,” Poponak wrote.
— Jesse Pound
Stocks are little changed at Friday’s open
Apple shares up 6% for the week
Apple CEO Tim Cook looks at new iPhone models following Apple’s “It’s Glowtime” event in Cupertino, California, on Sept. 9, 2024.
Nic Coury | AFP | Getty Images
A series of announcements helped push Apple‘s stock 6% higher this week.
On Thursday, CEO Tim Cook said on social media site X that the company will launch a new product next week. That may potentially be a 4th-generation iPhone SE supportive of its artificial intelligence system, Apple Intelligence, Goldman Sachs said in a note Thursday.
In addition, Apple will integrate Alibaba’s AI into its iPhones in China, Alibaba Chair Joe Tsai confirmed Thursday. The news was first reported by The Information on Tuesday. On Wednesday, Apple said it released an Apple TV+ app for Android phones.
“While investor sentiment on AAPL remains negative given skepticism around Apple Intelligence, competition in China and the smartphone upgrade cycle, we are encouraged the by upcoming rumored product releases (i.e. iPhone SE 4th gen and updated MacBook Airs) which should help sustain demand amidst smartphone and PC refresh cycles, as well as AAPL’s efforts to address China smartphone competition with a more accessible price point ($499 rumored price) and AI features,” Goldman analyst Michael Ng wrote.
— Michelle Fox
See the stocks moving before the bell
These are some of the stocks making notable moves in Friday’s premarket trading:
- Moderna — The biotechnology stock fell 5.4% after posting a wider per-share loss than analysts polled by LSEG expected in the fourth quarter. On the other hand, revenue came in ahead of the Street’s forecast.
- GameStop — Shares rallied 7.9% after sources familiar with the matter told CNBC that the video game retailer is considering investing in bitcoin and other cryptocurrencies.
- Informatica — Shares plunged 35% after the cloud data management company provided downbeat guidance for the current quarter.
— Alex Harring
Moderna falls on disappointing earnings
The Moderna Inc. headquarters in Cambridge, Massachusetts, on March 26, 2024.
Adam Glanzman | Bloomberg | Getty Images
Moderna shares dropped more than 4% after the vaccine maker reported mixed quarterly results.
The company’s fourth-quarter revenue of $966 million beat an LSEG estimate of $942.8 million. However, Moderna lost $2.91 per share during the period, marking a steeper loss than the $2.68 per share analysts had penciled in.
Moderna kept its 2025 product sales guidance intact in a range of $1.5 billion to $2.5 billion.
— Fred Imbert
Asia-Pacific markets mixed as investors assess Trump reciprocal tariffs plan
Asia-Pacific markets were mixed Friday after Wall Street rose overnight as President Donald Trump signed a reciprocal tariffs plan, but did not enact the levies immediately.
Mainland China’s CSI 300 Index ended the day 0.87% higher at 3,939. Hong Kong’s Hang Seng index traded up 3.48% in its final hour, extending its gains from the previous session. The HSI is on track to its highest weekly gain since last October.
South Korea’s Kospi closed up 0.31% at 2,591.05, while the small-cap Kosdaq advanced 0.94% to end the day at 756.32.
The country’s seasonally adjusted unemployment rate hit 2.9% in January, easing from its three-year high of 3.7% in the month before.
Japan’s benchmark Nikkei 225 ended the day 0.79% lower at 39,149.43, while the broader Topix index lost 0.23% to close at 2,759.21.
India’s benchmark Nifty 50 lost 0.82%, while the BSE Sensex index was down 0.83% in choppy trading as of 1.p.m. local time.
Australia’s S&P/ASX 200 closed 0.19% higher at 8,555.80.
— Amala Balakrishner
Retail investor pessimism rises to highest since November 2023, AAII survey shows
Almost half of all Main Street investors responding to a weekly survey from the American Association of Individual Investors are bearish on the outlook for stocks over the next six months, the largest number since November 2023. Pessimism rose to 47.3% in the survey out Thursday, from 42.9% last week and the most since 50.3% in late 2023.
The historical average for bearishness is 31.0%.
Only 28.4% of individual investors responding to the survey described themselves as bullish, down from 33.3% last week but only the lowest reading in a month. The historical average for optimism toward stocks is 37.5% over the life of the survey, which dates to the mid-1980s. The remainder of respondents are neutral toward stocks.
Nearly three out of five investors, or 57.4%, believe tariffs will slow the economy and raise prices, according to a special question asked by AAII. About a fifth, or 20.4%, think they’ll have “a temporary impact but not a lasting one,” while 12.5% said tariffs “will eventually lead to a stronger domestic economy.” About 10% saw no to limited effect, or had no opinion.
— Scott Schnipper
Stock making the biggest moves after hours: GameStop, Coinbase and more
These are the stocks moving the most in after-hours trading:
- GameStop — The video game retailer and meme-stock favorite jumped 7% in extended trading. GameStop is considering investing in bitcoin and other cryptocurrencies, sources familiar with the matter told CNBC.
- Coinbase — Shares of the cryptocurrency marketplace rose nearly 1% after fourth-quarter earnings outpaced expectations.
- Airbnb — Shares soared 12%. The vacation rentals company earned 73 cents per share on $2.48 billion in revenue in its fourth quarter. Analysts had penciled in earnings of 58 cents and revenue of $2.42 billion, according to LSEG.
Read the full list of stocks moving here.
— Lisa Kailai Han
