Dow, S&P Futures Rise Ahead of Earnings; Tariffs Eyed
US stock futures rose early Wednesday, with the Dow and S&P 500 indices up over 0.35%, ahead of key earnings reports from McDonald’s and Disney. The market’s early gains come as investors weigh the impact of Trump-era tariffs and prepare for a seasonally weak period.
Strategists warn that the tariffs imposed by the Trump administration pose the biggest risk to the market, with some predicting a slowdown in global growth. The tariffs, aimed at curbing China’s trade practices, have led to a rise in costs and uncertainty for many businesses. As the trade tensions continue, investors are likely to remain cautious, leading to a more volatile market.
Despite the concerns, growth, large caps, and financials are preferred by strategists, who believe these sectors are better positioned to weather the storm. The technology-heavy Nasdaq futures, however, lagged, rising just 0.2% amid AI stock pullbacks.
The earnings season is expected to be a crucial test of the market’s resilience, with several major companies set to report their quarterly results. McDonald’s and Disney are among the first to report, with investors eagerly waiting to see how these bellwethers of the consumer and entertainment industries perform.
McDonald’s, one of the largest fast-food chains in the world, is expected to report earnings per share (EPS) of $1.59, beating the consensus estimate of $1.56, according to Refinitiv. The company’s revenue is also expected to rise 4.5% year-over-year, driven by strong sales in its core markets.
Disney, the entertainment giant, is set to report EPS of $1.16, below the consensus estimate of $1.24. However, the company’s revenue is expected to rise 10.5% year-over-year, driven by the success of its streaming service, Disney+.
The earnings reports will be closely watched by investors, who are looking for signs of a slowdown in the global economy. The US economy has been growing steadily, but there are concerns that the trade tensions and tariffs could lead to a slowdown in the coming months.
The market’s early gains are also being driven by a rise in oil prices, which have climbed 1.3% to $58.60 per barrel. The rise in oil prices has led to a boost in energy stocks, with ExxonMobil and Chevron rising 1.5% and 1.2%, respectively.
Despite the early gains, strategists are warning that the market is entering a seasonally weak period, with the summer months historically being a challenging time for stocks. The summer months are often marked by a lack of catalysts, leading to a slowdown in trading activity.
In conclusion, the market’s early gains ahead of the earnings reports from McDonald’s and Disney are a welcome respite from the recent volatility. However, strategists warn that the tariffs and trade tensions pose a significant risk to the market, and investors should remain cautious.
