Dow, S&P Futures Rise Ahead of Earnings; Tariffs Eyed
US stock futures rose early Wednesday, with the Dow Jones Industrial Average and S&P 500 futures climbing over 0.35% ahead of key earnings reports from McDonald’s and Disney. However, strategists warned that the Trump-era tariffs pose the biggest risk as markets enter a seasonally weak phase. In this blog post, we’ll take a closer look at the market trends, earnings expectations, and the potential impact of tariffs on the stock market.
Market Trends
The Dow Jones Industrial Average and S&P 500 futures rose over 0.35% in early trading, indicating a strong start to the day. The Nasdaq futures, however, lagged behind, rising only 0.2% amid a pullback in AI stocks. The gains in the Dow and S&P 500 were driven by a mix of factors, including the positive earnings outlook for McDonald’s and Disney, as well as the anticipation of a potential trade deal between the US and China.
Earnings Expectations
McDonald’s and Disney are set to report their quarterly earnings today, and investors are eagerly waiting to see if they can meet their expectations. McDonald’s is expected to report earnings per share (EPS) of $2.21, while Disney is expected to report EPS of $1.87. The companies have been facing challenges in recent months, including increased competition and higher costs, which may affect their earnings.
Tariffs and Trade
Despite the positive earnings outlook, strategists are warning that the Trump-era tariffs pose the biggest risk to the market. The tariffs, which were imposed on Chinese goods in 2018, have had a significant impact on the US economy, and their removal could boost growth and stocks. However, the ongoing trade tensions between the US and China have created uncertainty, and investors are cautious.
“The tariffs are the biggest risk to the market right now,” said Michael Antonelli, market strategist at Robert W. Baird. “If we get a trade deal, that could be a positives for the market, but if not, it could be a negative.”
Sector Preferences
Growth, large caps, and financials are preferred sectors in the current market environment. Growth stocks, such as those in the technology and healthcare sectors, have been performing well in recent months, driven by their strong earnings growth and high valuations. Large caps, such as those in the Dow Jones Industrial Average, have also been performing well, driven by their stability and high dividend yields. Financials, including banks and insurance companies, have also been performing well, driven by their strong earnings growth and high valuations.
Conclusion
In conclusion, the Dow and S&P 500 futures rose early Wednesday, ahead of key earnings reports from McDonald’s and Disney. However, strategists warned that the Trump-era tariffs pose the biggest risk to the market, and investors are cautious. Growth, large caps, and financials are preferred sectors in the current market environment. As markets enter a seasonally weak phase, investors will be closely watching the earnings reports and trade developments to determine the direction of the market.
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