Market Beats | US Corporate Profits Post Biggest Drop Since 2020; US Trade Court Rules Trump Global Tariffs Illegal; Federal Judge to Expand Block on Ban on Harvard Enrolling Foreign Students; Top Musk Lieutenant Departs DOGE; US Pending Home Sales Drop Most Since 2022; Salesforce uses AI to reduce engineering hires; Nvidia posts 69% revenue surge

—— US Corporate Profits Post Biggest Drop Since 2020; US Trade Court Rules Trump Global Tariffs Illegal; Federal Judge to Expand Block on Ban on Harvard Enrolling Foreign Students; Top Musk Lieutenant Departs DOGE; US Pending Home Sales Drop Most Since 2022; Salesforce uses AI to reduce engineering hires; Nvidia posts 69% revenue surge

1. US Corporate Profits Post Biggest Drop Since 2020

US corporate profits fell in the first quarter by the most since 2020, signaling that large companies were already under pressure before President Donald Trump’s sweeping tariffs took effect.

Profits declined 2.9% from the previous quarter, which had seen a 5.4% gain, according to data released Thursday by the Bureau of Economic Analysis. Despite the drop, profits remained well above historical averages relative to gross domestic product, which fell 0.2%.

How American companies respond to rising import tariffs — by raising prices or absorbing costs — has become a central question for the 2025 economic outlook. Most Wall Street economists expect inflation to pick up this year, eroding household purchasing power and weighing on growth.

Trump recently targeted Walmart Inc. in a social media post, after the retail giant warned of upcoming price increases. The president argued that Walmart should “‘EAT THE TARIFFS’ and not charge valued customers ANYTHING,” citing the company’s strong profits.

Thursday’s data showed that after-tax profits of nonfinancial firms as a share of gross value added — a proxy for profit margins — slipped slightly to 15.7% from 15.9%, still well above the 1951–2019 range. The modest drop suggests many large firms still have capacity to absorb higher input costs without immediately passing them on to consumers.

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2. US Trade Court Rules Trump’s Global Tariffs Illegal

The vast majority of President Donald Trump’s global tariffs were ruled illegal by the US Court of International Trade, marking one of the biggest judicial rebukes of his economic agenda to date.

In a unanimous decision issued Wednesday, a three-judge panel in Manhattan sided with Democratic-led states and small businesses who argued Trump unlawfully invoked emergency powers to justify sweeping trade levies. The court gave the administration 10 days to “effectuate” the order but didn’t specify how the tariffs should be unwound.

The decision targets Trump’s global flat tariffs, elevated duties on China and others, and tariffs tied to fentanyl imports from China, Canada, and Mexico. However, duties imposed under other legal authorities, such as Section 232 and Section 301 — including those on steel, aluminum, and cars — remain unaffected.

The Justice Department has already filed a notice of appeal with the US Court of Appeals for the Federal Circuit. The Supreme Court may ultimately decide the case, which could impact trillions of dollars in global trade. For now, the tariffs are permanently blocked unless the appeals court reinstates them during litigation.

Markets responded positively. Nasdaq 100 futures rose as much as 2.1%, the dollar strengthened, and the yen weakened.

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3. Federal Judge to Expand Block on Trump Administration’s Ban on Harvard Enrolling Foreign Students

A federal judge said Thursday she intends to broaden a temporary injunction blocking the Trump administration’s attempt to bar Harvard University from enrolling international students.

During a hearing in Boston, US District Judge Allison Burroughs indicated she will issue a longer-term order after having paused the enforcement of the administration’s action last week. The Trump administration had revoked Harvard’s certification to enroll foreign students, citing concerns over campus safety and governance.

Judge Burroughs gave attorneys for both Harvard and the government time to discuss proposed terms of the injunction and said she will issue a formal order at a later date.

The case is part of a broader legal battle between elite universities and the Trump administration, which has also frozen billions of dollars in federal funding and taken steps to tighten visa scrutiny for foreign students.

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4. Top Musk Lieutenant Departs DOGE

Steve Davis, Elon Musk’s de facto second-in-command at the Department of Government Efficiency (DOGE), is exiting the Trump administration’s flagship cost-cutting effort, according to a person familiar with the matter.

Like Musk, Davis served as a special government employee, a designation that allowed him to maintain his role as CEO of the Boring Company while working on the initiative. SGEs are permitted to work up to 130 days annually in a government role.

Davis has long been a trusted Musk lieutenant, having worked at SpaceX and Twitter (now rebranded as X), in addition to running the Boring Company. His departure leaves the future of DOGE in the hands of lower-profile White House and agency officials.

Key remaining figures in the initiative include Anthony Armstrong, a former Morgan Stanley banker who helped Musk acquire Twitter, and Antonio Gracias, Musk confidant and CEO of Valor Equity Partners.

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5. US Pending Home Sales Drop Most Since 2022

Pending sales of previously owned homes in the US fell by the most since September 2022, highlighting a sluggish spring selling season as high prices and mortgage rates keep buyers on the sidelines.

The National Association of Realtors reported Thursday that its index of contract signings declined 6.3% in April to 71.3. The drop exceeded all forecasts in a Bloomberg survey of economists. Pending sales in the West fell the most in over two and a half years.

The data suggest that the resale housing market will remain muted unless home prices ease from record levels and mortgage rates fall closer to 6% from the current 7%. Although more homeowners are listing properties, many are holding out for better financing conditions. “The market is all about mortgage rates right now,” said NAR Chief Economist Lawrence Yun.

Regionally, contract signings declined 7.7% in the South — the nation’s largest housing market — 8.9% in the West, and 5% in the Midwest.

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6. Salesforce uses AI to reduce engineering hires

Salesforce Inc. said its adoption of artificial intelligence tools has allowed it to reduce hiring needs, underscoring how emerging technologies are reshaping workforce strategies.

“We have reduced some of our hiring needs,” said Chief Financial and Operations Officer Robin Washington on a call with analysts Wednesday, citing the implementation of AI tools. For example, 500 customer service employees will be reassigned to other roles within the company this year, saving $50 million.

Tech firms are increasingly turning to AI to handle tasks such as customer support and software development. Earlier this month, Microsoft Corp.’s job cuts hit software engineers hardest. Executives at Microsoft and Alphabet have said AI now generates about 30% of new code on certain projects. Meta Platforms Inc. is also relying on AI-powered engineers to fix bugs and improve products, according to CEO Mark Zuckerberg.

In an interview, Washington said Salesforce is hiring fewer engineers due to AI-driven productivity gains. “We view these as assistants, but they are going to allow us to have to hire less and hopefully make our existing folks more productive.” Salesforce reported a total workforce of about 76,500 as of Jan.31.

While slowing hiring in some areas, Salesforce is expanding its salesforce. Chief Revenue Officer Miguel Milano said the company currently has 13,000 sales employees and plans to grow that number by 22% this year.

Earlier this year, Salesforce announced it would cut more than 1,000 roles while continuing to hire for AI-focused positions, especially in sales.

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7. Nvidia posts 69% revenue surge

Nvidia reported a 69% year-on-year jump in revenue to $44.1 billion for the quarter ending April 27, surpassing Wall Street’s forecast of $43.3 billion, even as it absorbs a major revenue hit from US export restrictions targeting China.

The chipmaker, central to the global AI infrastructure boom, expects revenue of about $45 billion for the current quarter, plus or minus 2%. That range puts its guidance slightly below the Bloomberg consensus estimate of $45.5 billion. Nvidia shares rose 5% in early Thursday trading.

The company is navigating the fallout from President Donald Trump’s renewed trade tensions with China, including export controls introduced in April that barred Nvidia from selling its AI chips specifically tailored for the Chinese market. Nvidia said those curbs led to a $4.5 billion charge last quarter and an additional $2.5 billion in missed sales. The company also expects to lose roughly $8 billion in Chinese revenue this quarter as a result.

CEO Jensen Huang said demand for Nvidia products remains “incredibly strong,” but he reiterated criticism of the US government’s export control measures on a call with analysts.

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