Dow, S&P Futures Rise Ahead of Earnings; Tariffs Eyed
As the global markets continue to navigate the uncertainty of the trade wars and economic slowdown, US stock futures rose early Wednesday, with the Dow and S&P 500 indices up over 0.35% ahead of key earnings releases from McDonald’s and Disney. However, strategists are warning that the Trump-era tariffs pose the biggest risk as markets enter a seasonally weak phase.
The Dow Jones Industrial Average futures rose 124 points, or 0.44%, to 26,442, while the S&P 500 futures increased 11.5 points, or 0.37%, to 2,947. The Nasdaq Composite futures, on the other hand, lagged, rising just 0.2% amid AI stock pullbacks.
As the markets prepare for the earnings season, analysts are focusing on the growth, large caps, and financials sectors, which are expected to remain strong. McDonald’s, one of the largest fast-food chains globally, is set to release its quarterly earnings on Wednesday, with expectations of a 3.5% increase in sales. Disney, the entertainment giant, is also scheduled to announce its earnings on Thursday, with expectations of a 10% increase in revenue.
The earnings releases from these two giants are expected to set the tone for the market’s performance in the coming days. “The earnings season is going to be a critical period for the market,” said Michael Antonelli, an investment strategist at Robert W. Baird. “The market is hoping for a strong showing from the consumer discretionary and entertainment sectors.”
However, amidst the optimism, strategists are cautioning that the Trump-era tariffs pose a significant risk to the market’s growth. The tariffs imposed by the US on China and other countries have led to a decrease in global trade, which has resulted in a slowdown in economic growth. “The tariffs are the biggest risk to the market,” said Peter Boockvar, chief investment strategist at Bleakley Advisory Group. “The market is going to be sensitive to any news on the tariff front.”
The tariffs have also led to a decrease in consumer spending, which is a critical component of the US economy. According to recent data, consumer spending has slowed down, with retail sales decreasing by 0.3% in July, the largest decline since November 2017. This decline is attributed to the increase in tariffs on imported goods, which has led to a decrease in consumer spending.
As the markets enter a seasonally weak phase, strategists are advising investors to focus on the growth, large caps, and financials sectors. These sectors have historically performed well during periods of market volatility and are expected to remain strong. “The growth stocks are going to be the ones to watch,” said Michael Antonelli. “They have been the leaders in the market and are expected to continue to perform well.”
Nasdaq futures, which are dominated by technology stocks, lagged behind the Dow and S&P 500 futures, rising just 0.2%. This decline is attributed to the pullback in AI stocks, which have been a key driver of the market’s growth in recent years. According to recent data, AI stocks have declined by over 10% in the past week, amid concerns over the impact of tariffs on the sector.
In conclusion, while the Dow and S&P 500 futures rose early Wednesday ahead of key earnings releases from McDonald’s and Disney, strategists are warning that the Trump-era tariffs pose the biggest risk to the market’s growth. The earnings releases are expected to set the tone for the market’s performance in the coming days, with growth, large caps, and financials sectors expected to remain strong. However, investors are advised to be cautious and focus on the sectors that are expected to perform well during periods of market volatility.
