Dow, S&P futures rise ahead of earnings; tariffs eyed
US stock futures rose early Wednesday, with the Dow and S&P 500 indices both up over 0.35% ahead of key earnings reports from McDonald’s and Disney. Despite the positive start to the day, strategists cautioned that the looming Trump-era tariffs pose the biggest risk to the market as it enters a seasonally weak phase. As such, growth, large caps, and financials are preferred sectors, while AI stocks are showing signs of pullback.
The Dow Jones Industrial Average futures rose 140 points, or 0.46%, to 26,445, while the S&P 500 futures climbed 12 points, or 0.43%, to 2,932. Nasdaq futures, however, lagged behind, rising just 0.2% amid a pullback in AI stocks.
The upcoming earnings season is expected to be a crucial test for the market, with investors looking for signs of growth and profitability from some of the largest corporations in the US. McDonald’s and Disney are among the first major companies to report, and their results will be closely watched for any signs of weakness or strength in the broader economy.
Despite the positive earnings expectations, strategists are warning that the Trump-era tariffs pose a significant risk to the market. The tariffs, which were imposed on a range of goods from China and other countries, have already had a significant impact on global trade and could continue to weigh on the market.
“We are entering a seasonally weak period, and tariffs are a major risk factor,” said Michael Antonelli, market strategist at Robert W. Baird. “The market is going to be focused on earnings, but it’s also going to be focused on the trade situation. If the tariffs continue to escalate, that could have a big impact on the market.”
The tariffs have already had a significant impact on certain sectors, such as technology and consumer goods, which have been particularly hard hit by the trade tensions. As a result, investors are showing a preference for growth, large caps, and financials, which are seen as more resilient to the trade tensions.
Growth stocks, such as those in the technology and healthcare sectors, are expected to continue to perform well, despite the headwinds from the tariffs. Large caps, which have historically been less volatile than smaller companies, are also expected to remain strong, as investors seek out the stability and predictability of established companies.
Financials, which have been a bright spot in the market in recent months, are also expected to continue to perform well, as investors seek out the safety and stability of banks and other financial institutions.
In contrast, AI stocks are showing signs of pullback, as investors become increasingly cautious about the sector’s growth prospects. The technology sector has been a major driver of the market’s gains in recent years, but the tariffs have already had a significant impact on certain sub-sectors, such as semiconductors and electronics.
As the market enters this seasonally weak period, investors will be closely watching the earnings reports from McDonald’s and Disney, as well as other major corporations, to get a sense of the broader economy’s health. The tariffs will also continue to be a major focus, as investors try to gauge the impact they will have on the market and the broader economy.
In the meantime, the Dow and S&P 500 futures are set to continue their positive start to the day, with the Nasdaq futures lingering slightly behind. While the market is likely to experience some volatility in the coming days, strategists are warning that the Trump-era tariffs pose a significant risk to the market’s future performance.
