Dow, S&P Futures Rise Ahead of Earnings; Tariffs Eyed
As the earnings season is set to kick off, US stock futures are showing a positive start, with the Dow and S&P 500 futures rising by over 0.35%. The markets are gearing up for key earnings reports from McDonald’s and Disney, two of the largest and most widely followed companies in the US. However, strategists are warning that the biggest risk to the market lies in the Trump-era tariffs, which could have a significant impact on the global economy.
The Dow Jones Industrial Average futures rose by 0.37%, or 104 points, to 26,444, while the S&P 500 futures climbed 0.35%, or 8.5 points, to 2,941. The Nasdaq futures, however, lagged behind, rising just 0.2%, or 21 points, to 7,944, amid pullbacks in AI stocks.
Despite the positive start, strategists are cautioning that the market is entering a seasonally weak phase, typically marked by lower trading volumes and increased volatility. The Trump-era tariffs, which have been in place for over a year, continue to pose a significant risk to the global economy and the US stock market.
“The biggest risk to the market is the tariffs,” said Ryan Detrick, senior market strategist at LPL Financial. “The global economy is already slowing down, and the tariffs are just going to make it worse. We’re seeing a lot of uncertainty, and that’s going to keep the market volatile.”
Detrick added that growth stocks, large caps, and financials are preferred as investors seek safety in the face of uncertainty. “Growth stocks are going to be more resilient, and large caps are going to be less affected by the tariffs,” he said.
The earnings reports from McDonald’s and Disney are likely to be closely watched, as they provide a snapshot of the consumer and entertainment industries. McDonald’s, which is expected to report earnings per share (EPS) of $1.45, is seen as a bellwether for the consumer sector, while Disney, which is expected to report EPS of $1.83, is seen as a proxy for the entertainment industry.
The earnings season is expected to be a crucial test for the market, as investors seek to gauge the health of the US economy. The US Federal Reserve has been keeping a close eye on the economy, and the latest data suggests that the economy is slowing down. The Fed is widely expected to cut interest rates again in September, which could provide a boost to the market.
However, the tariffs remain a significant risk, and investors are closely watching the situation. The Trump administration has been imposing tariffs on imports from China, Mexico, and other countries, which has led to a range of retaliatory measures from affected nations.
The tariffs have already had a significant impact on the global economy, with trade volumes declining and businesses cutting back on investments. The US-China trade war, in particular, has been a major source of tension, with both sides refusing to back down.
In the face of this uncertainty, investors are seeking safety in the market. Growth stocks, which have been a key driver of the market’s gains over the past few years, are seeing a pullback, while large caps and financials are gaining favor.
“Growth stocks are going to be more volatile, and investors are seeking safety in the market,” said Detrick. “Large caps and financials are seen as a safer bet, and that’s where investors are going to be focusing.”
In conclusion, the US stock futures are showing a positive start ahead of key earnings reports from McDonald’s and Disney. However, strategists are warning that the Trump-era tariffs pose the biggest risk to the market, and investors are seeking safety in the face of uncertainty. Growth stocks, large caps, and financials are preferred, and the market is entering a seasonally weak phase. As the earnings season unfolds, investors will be closely watching the situation, and the market’s reaction will be closely watched.
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