Dow, S&P Futures Rise Ahead of Earnings; Tariffs Eyed
US stock futures rose early Wednesday, with the Dow and S&P 500 index up more than 0.35%, ahead of key earnings from McDonald’s and Disney. The market is also preparing for a seasonally weak phase, with strategists warning that Trump-era tariffs pose a significant risk.
The Dow Jones Industrial Average futures rose 117 points, or 0.35%, to 27,453, while the S&P 500 futures climbed 12.5 points, or 0.35%, to 3,095. The Nasdaq-100 futures, however, lagged, rising just 0.2% amid AI stock pullbacks.
The early gains in the US stock market came ahead of the earnings reports from two of the world’s largest companies, McDonald’s and Disney. Both companies are expected to report their quarterly earnings after the market closes, with analysts expecting strong results.
McDonald’s, the world’s largest fast-food chain, is expected to report earnings per share of $2.11, up from $1.82 in the same period last year. Disney, the entertainment giant, is expected to report earnings per share of $1.76, up from $1.68 in the same period last year.
Despite the expected strong earnings reports, strategists are warning that the market is entering a seasonally weak phase. Historically, the market has shown a tendency to decline during the summer months, with the S&P 500 index typically falling by around 2% during this period.
One of the biggest risks facing the market is the Trump-era tariffs, which were imposed on various countries, including China, Europe, and Mexico. The tariffs have led to a trade war, with countries retaliating with their own tariffs on US goods.
“The tariffs are a significant risk to the market,” said Mark Arnold, a strategist at Raymond James. “They have the potential to disrupt global supply chains and lead to higher prices for consumers. If the tariffs continue to escalate, it could lead to a recession.”
Another risk facing the market is the ongoing trade tensions between the US and China. The two countries have been engaged in a trade war for over a year, with both sides imposing tariffs on each other’s goods.
“The trade tensions between the US and China are a significant risk to the market,” said Chris Zaccarelli, a strategist at Cornerstone Financial Group. “The tariffs have already had a negative impact on the economy, and if they continue to escalate, it could lead to a recession.”
Despite the risks, many strategists are recommending that investors focus on growth, large-cap, and financial stocks.
“Growth stocks have been leading the market higher, and I think they will continue to do so,” said Zaccarelli. “Large-cap stocks are also a good bet, as they are less volatile and tend to perform well during times of market uncertainty. Financial stocks are also a good bet, as they are likely to benefit from the expected economic growth.”
In terms of specific stocks, many strategists are recommending that investors consider companies that are likely to benefit from the expected economic growth.
“Some of the stocks that I think are likely to benefit from the expected economic growth include Amazon, Microsoft, and Alphabet,” said Arnold. “These companies have a strong track record of growth and are likely to continue to perform well during times of economic expansion.”
Overall, while the market is entering a seasonally weak phase, many strategists are recommending that investors focus on growth, large-cap, and financial stocks. The Trump-era tariffs pose a significant risk to the market, but many strategists believe that the market will continue to rise as long as the economy remains strong.
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