US companies are very nervous before the new US-China negotiations

(Reuters) – During the US quarterly reporting season, the trade war between the United States and China raises serious concerns. Companies as diverse as Juniper Networks and O'Reilly Automotive lament the consequences, while claiming that they are finding ways to weather the storm.

Trade talks were postponed to Shanghai on Tuesday as stock market investors are sensitive to the consequences of the year-long conflict and any sign of escalation.

According to FactSet, rates were mentioned in about one-third of the teleconferences organized by the S & P 500 companies, which report their quarterly results through July 26. The 71 companies reporting tariffs are up among the 50 companies discussing tariffs in the same period of time during the first quarter season, but less than the previous 99, when tariffs were an emerging issue for companies US.

Many of these companies explained to investors their intention to minimize the effects of the trade war, which added to the uncertainty as they struggled against a gloomy global economy, including gloomy economies in Europe and the United States. Japan.

O'Reilly Automotive Parts Supplier (ORLY.O) said during his teleconference last week that he had increased the prices of his products to offset the higher costs badociated with rates.

Network hardware manufacturer Juniper Networks Inc (JNPR.N) missed Thursday the midpoint of its margin forecast because of tariffs, claiming that he expected the pressure to continue even if he manages his operating expenses for mitigate the damage.

Among the components of the S & P 500 index that released their second quarter results, export-oriented companies outperformed badysts' expectations 77% of the time, while companies focused on 39, national economy have exceeded expectations than 66%, according to an badysis of Credit Suisse.

This suggests that export-oriented firms feel less affected by the trade war than what investors expect, said Patrick Palfrey, Credit Suisse Profit Analyst.

"Trade is an aggravating factor, as opposed to the main driver of the slowdown," said Palfrey.

According to Refinitiv's IBES data, earnings for the S & P 500 are expected to have increased only 0.6% in the second quarter compared to last year. Much of the slowdown is due to difficult comparisons with last year, when US tax cuts had resulted in a 24.9% increase in second-quarter earnings.

About 76% of the 222 companies that reported Monday morning earnings exceeded badysts' earnings guidance, which is in line with the recent trend.

Profit forecasts for the third quarter have now turned negative, down 0.6% from the previous year, based on Refinitiv data.

In the past year, Wall Street has reacted strongly to the tweets of US President Donald Trump, suggesting various advances and failures in the settlement of the trade dispute. Backed by expectations, the Federal Reserve will cut interest rates, but also suggesting that investors are less and less sensitive to the uncertainties of the trade war, the S & P 500 has jumped 20% since beginning of the year and reached a record level last week.

Mattel's (MAT.OThe share price has risen 16% since Thursday, when the manufacturer's quarterly results exceeded expectations, while cautioning against the consequences of the escalating trade war.

"We are paying attention to the potential tariff that could be put in place and which, if implemented, would have an impact on the entire toy sector. We have put in place contingency plans and are working closely with retailers to align with our rate mitigation strategy, "Mattel CEO Ynon Kreiz told a conference call last week.

The Philadelphia Semiconductor .SOX Index climbed 38% in 2019, as US commercial strains and restrictions on sales to Chinese telecommunications companies Huawei make it more difficult to predict when US chip makers will recover from A cyclical global recession.

Investors were surprised last week after Texas Instruments (TXN.O) said that the trade tensions between the United States and China did not prevent it from conducting business in China, while Intel (INTC.O) said on Thursday that customers worried about potential chip prices were preemptively buying processors.

"We really think the second quarter has been very difficult," said George Davis, Intel's chief financial officer, after Reuters reported on the results. "Depending on the evolution of trade discussions, there may be additional activity, but we are not expecting the same level, if at all, in the third quarter. We anticipate the demand based on the signals we receive from our customers. "

China recently said it would allow Chinese companies to buy US farm products duty-free, while Washington has encouraged companies to seek a waiver of a national security ban on sales to Huawei. But at the beginning of the negotiations, neither side implemented the measures to show goodwill.