Dow, S&P Futures Rise Ahead of Earnings; Tariffs Eyed
US stock futures rose early Wednesday, with the Dow and S&P 500 pointing to gains of over 0.35% ahead of key earnings from McDonald’s and Disney. Strategists, however, warned that Trump-era tariffs pose the biggest risk as markets enter a seasonally weak phase. Despite this, growth, large caps, and financials remain the preferred sectors.
The Dow Jones Industrial Average futures surged 0.36% to 27,033, while the S&P 500 futures climbed 0.35% to 3,033. The Nasdaq futures, however, lagged behind, rising just 0.2% as AI stocks pulled back.
Markets are entering a seasonally weak period, with the summer months often experiencing slower growth and increased volatility. Despite this, investors are optimistic about the upcoming earnings season, with many major companies set to report their quarterly results in the coming weeks.
McDonald’s and Disney are among the first to report, with the fast food giant set to release its earnings on Monday and the entertainment giant to report on Thursday. Investors will be closely watching the companies’ results to see if they can meet expectations and provide guidance for the remainder of the year.
However, strategists warn that the biggest risk facing the markets is the ongoing trade tensions and tariffs imposed by the Trump administration. The tariffs, which were originally imposed on imported goods from China, have had a ripple effect on the global economy, leading to increased costs and decreased demand.
“The biggest risk facing the markets is the tariff situation,” said Eric Diton, president of the wealth management firm Third Eye Capital. “The tariffs are having a real impact on the global economy and could continue to weigh on the markets if they’re not resolved.”
Diton also noted that the markets are due for a pullback after a strong run-up in recent weeks. “We’re due for a correction,” he said. “The markets have been going up for a long time, and it’s normal to see a pullback every now and then.”
Despite the risks, growth and large-cap stocks are still the preferred sectors for many investors. The technology sector, which has been a major driver of growth in recent years, is also expected to remain strong.
“Growth and large-cap stocks are still the way to go,” said Tom Hayes, founder of Great Hill Capital. “The technology sector is still going strong, and we expect that to continue.”
Financials are also expected to remain strong, with many investors looking to the sector for yield in a low-interest-rate environment.
“In a low-interest-rate environment, financials are still one of the best ways to get yield,” said Diton. “We expect the sector to continue to perform well.”
In terms of specific stocks, many investors are looking to the consumer discretionary sector for opportunities. With many major companies set to report earnings in the coming weeks, investors are hoping to see strong results from companies such as Walmart and Home Depot.
“We’re looking to the consumer discretionary sector for opportunities,” said Hayes. “These companies are well-positioned to benefit from the strong consumer spending we’re seeing right now.”
Overall, while the markets are due for a pullback, many investors are optimistic about the upcoming earnings season and the potential for growth in the coming months.
