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. As markets enter a seasonally weak phase, strategists are warning that Trump-era tariffs pose the biggest risk to the market’s momentum.
The Dow Jones Industrial Average futures climbed 140 points, or 0.44%, to 27,144, while S&P 500 futures rose 12 points, or 0.36%, to 3,031. Nasdaq futures, however, lagged, rising just 0.2% amid pullbacks in AI stocks.
The rise in futures comes ahead of a busy earnings season, with McDonald’s set to report its quarterly results after the bell on Wednesday. Disney is also expected to release its earnings report later in the day. Both companies are expected to report strong earnings, with McDonald’s expected to post $1.64 per share and Disney expected to post $1.14 per share, according to Thomson Reuters estimates.
Despite the strong earnings expectations, strategists are cautioning investors to be cautious heading into a seasonally weak period. The second quarter is typically one of the weakest for the stock market, with the S&P 500 historically falling by an average of 1.8% during the quarter.
“The biggest risk to the market right now is the tariffs,” said Michael Antonelli, market strategist at Robert W. Baird. “The uncertainty surrounding the trade situation is going to continue to weigh on the market’s mind.”
The Trump administration has imposed tariffs on billions of dollars’ worth of goods from China, and has threatened to impose additional tariffs if a trade deal is not reached. China has retaliated with its own tariffs on US goods, and the trade war has been a major source of volatility for the stock market.
Growth stocks, large caps, and financials were among the preferred sectors on Wednesday, with investors seeking out defensive names that can weather any potential economic downturn. Technology stocks, particularly those in the AI and cloud computing spaces, were among the laggards, with investors selling off shares ahead of the release of earnings reports from companies like Amazon and Microsoft.
“The market is still trying to find its footing,” said Tom Essaye, founder of Sevens Report Research. “Until we get some clarity on the trade situation, I think investors are going to be cautious.”
In other market news, the US dollar rose against a basket of major currencies, while government bond yields fell. Crude oil prices rose, with the West Texas Intermediate contract climbing 0.4% to $59.25 per barrel.
