Dow, S&P Futures Rise Ahead of Earnings; Tariffs Eyed
The US stock market is expected to open higher on Wednesday, with Dow and S&P 500 futures pointing to gains of over 0.35% ahead of key earnings reports from McDonald’s and Disney. However, strategists are warning that tariffs imposed by the Trump administration pose the biggest risk to the markets as they enter a seasonally weak phase.
As the earnings season gets underway, investors are focusing on the performance of major companies, including fast-food giant McDonald’s and entertainment behemoth Disney. Both companies are expected to report their quarterly earnings later today, with McDonald’s set to release its figures at 8:00 AM ET and Disney’s report slated for 4:00 PM ET.
Futures contracts for the Dow Jones Industrial Average and the S&P 500 were up 0.35% and 0.38%, respectively, in early trading hours. The Nasdaq futures, however, were lagging, rising just 0.2% amid pullbacks in AI stocks.
Despite the expected gains, strategists are cautioning that the market is entering a challenging period. The summer months are typically marked by lower trading volumes and increased volatility, making it a tough time for investors.
“The summer doldrums are here, and the market is likely to be choppy,” said Michael Antonelli, market strategist at Robert W. Baird. “The biggest risk to the market right now is the tariffs. The uncertainty surrounding the tariffs is weighing on investors’ minds.”
The Trump administration has imposed tariffs on numerous countries, including China, Mexico, and the European Union, sparking retaliatory measures from these nations. The tariffs have had a significant impact on the global economy, leading to slower growth and increased inflation.
“The tariffs are a major concern for investors,” said Craig Erlam, senior market analyst at OANDA. “The uncertainty surrounding the tariffs is making it difficult for investors to make informed decisions, and it’s having a negative impact on the market.”
Despite the challenges posed by the tariffs, some strategists are advising investors to focus on growth, large-cap, and financial stocks. These sectors have historically performed well during times of economic uncertainty and are likely to continue to do so.
“Growth stocks are a good place to be right now,” said Antonelli. “These stocks tend to perform well during times of uncertainty, and they offer investors a way to play the recovery when it comes.”
Large-cap stocks, such as those in the Dow Jones Industrial Average, are also a good bet, according to some strategists. These stocks tend to be less volatile than smaller-cap stocks and offer investors a way to play the market without taking on too much risk.
Financial stocks are also a good option, according to Erlam. These stocks tend to perform well during times of economic uncertainty, as investors seek safe-haven assets.
“The financial sector is a good place to be right now,” said Erlam. “These stocks tend to perform well during times of uncertainty, and they offer investors a way to play the recovery when it comes.”
In conclusion, while the market is expected to open higher on Wednesday, strategists are warning that tariffs pose the biggest risk to the market as it enters a seasonally weak phase. Despite the challenges, some strategists are advising investors to focus on growth, large-cap, and financial stocks, which have historically performed well during times of economic uncertainty.
