Can Whirlpool Remain Durable?

In Tuesday's Daily Market Commentary webinar, we got a lot of questions about the impact of tariffs on stocks. President Donald Trump's tariffs on steel and aluminum have not been fully imposed yet, and some exporters are likely to be exempt, but they are still causing problems for durable goods makers like Whirlpool (WHR). Along with other manufacturers, Whirlpool has already been warning its investors that rising costs may slow profits next year.

Tariffs May Have Unintended Effects

The issue for manufacturers who use steel and aluminum as an input for the products they manufacture is that tariffs on raw materials increase their costs, which takes time to pass along to consumers. In the meantime, manufacturers wind up absorbing the higher costs and suffering from lower profit margins. Unless economic growth offsets the damage, even passing along those extra costs may hurt manufacturers because it lowers demand. 

In Whirlpool's case, this is especially problematic in the short-term. The stock rallied after releasing earnings in April but has now reached a key pivot level near $164-165 per share. From a technical perspective, any bad news could trigger selling at this level, which increases the importance of the durable goods report that the Census Bureau will be releasing on Friday. In a market where not much impresses investors, WHR could be sucked into a whirlpool of profit-taking after rising 14% since April.