Delta Air Lines (DAL) revised its forecast for the current quarter downward on Monday due to decreased consumer and corporate confidence, as well as softer domestic demand amid “macro uncertainty.” These warnings offer an early indication of how recent market volatility and concerns about the economic outlook are impacting corporate performance in the first quarter of the year. In an announcement preceding an investor presentation scheduled for Tuesday, the company disclosed that revenue growth is now projected to be in the range of 3%-4% for the first quarter, a decrease from the previously anticipated 7%-9%. Additionally, profits are expected to be affected, with earnings per share estimated to fall between $0.30 and $0.50 for the first quarter, down from the previously expected $0.70-$1.00 range. Subsequent to this news, Delta’s stock dropped by as much as 13% in after-hours trading on Monday. Prior to this, shares had already declined by over 16% due to ongoing challenges within the aviation industry. Notably, Delta cited weakening domestic demand as the primary reason for the revised guidance, while mentioning that trends in premium, international, and loyalty revenue growth are on track with expectations. This update is in line with broader market trends, where US growth forecasts have been diminishing while European outlooks have been improving. Recent data has shown a decline in consumer sentiment and spending, with consumer spending decreasing for the first time in nearly two years in January and retail sales experiencing their biggest monthly drop in a year. Consumer confidence also saw a significant monthly decline in February, mainly attributed to uncertainties surrounding President Trump’s policies. As market confidence wanes, investors are closely monitoring the relationship between consumer sentiment and corporate performance. Stuart Kaiser, Citi’s head of US equity trading strategy, highlighted the connection between policy uncertainty, consumer confidence, and market behavior. The implications of a weakened consumer outlook on US equities have been a point of concern, especially as passive equity funds experienced outflows in early February. The future impact of these factors remains uncertain, with no clear signs yet of relief in sight.
