S&P 500, Nasdaq Futures Rise as Tariff Truce, Tech Earnings Eyed
The US market futures edged higher on Monday, as traders remained optimistic about a likely 90-day extension of the China tariff truce and awaited key tech earnings. S&P 500 and Nasdaq 100 futures rose 0.10% and 0.20% respectively, indicating a positive start to the week.
The tariff truce, which was initially announced in October, is set to expire on December 15. However, both the US and China have signaled their willingness to extend the truce, which has helped to ease trade tensions and boost market sentiment.
The tech sector, which has been a key driver of market gains in recent years, is set to kick off the earnings season this week. Major tech giants such as Apple, Amazon, and Microsoft are expected to report their quarterly earnings, providing investors with a glimpse into the sector’s performance.
Morgan Stanley’s chief US equity strategist, Michael Wilson, is optimistic about the market’s prospects over the next 12 months. In a recent note, Wilson cited several factors that could drive returns, including the growing adoption of artificial intelligence (AI), tax breaks, dollar weakness, and possible Federal Reserve interest rate cuts in 2026.
“AI is a secular growth driver that will benefit many industries, including technology, healthcare, and industrials,” Wilson said. “Additionally, the Tax Cuts and Jobs Act (TCJA) has provided a tailwind for the US economy, and we expect the dollar to weaken in the coming year, making US exports more competitive.”
Wilson also noted that the Fed’s dovish stance could lead to interest rate cuts in 2026, which would further boost the market. “The Fed is likely to keep rates low for an extended period, which will support the market,” he said.
The S&P 500 has rallied over 25% this year, driven by a combination of factors including the tariff truce, central bank easing, and strong corporate earnings. The index has also received support from the rotation into value stocks, which has helped to offset the decline in growth stocks.
The Nasdaq 100, which is heavily weighted towards technology stocks, has also rallied sharply this year. The index has gained over 30% in 2022, driven by the strong performance of tech giants such as Amazon, Microsoft, and Alphabet.
Despite the recent rally, some investors remain cautious, citing concerns about the market’s valuation and the potential for a slowdown in corporate earnings growth. The S&P 500 is currently trading at around 18 times its earnings, which is above its historical average.
However, Wilson remains optimistic about the market’s prospects, citing the potential for earnings growth to exceed expectations. “We expect earnings growth to surprise to the upside, driven by the strong economy and the benefits of tax cuts,” he said.
In conclusion, the market is likely to remain volatile in the coming weeks, driven by the ongoing trade tensions and the uncertainty surrounding the tariff truce. However, with key tech earnings on the horizon and the potential for a 90-day extension of the tariff truce, there are plenty of reasons to be optimistic about the market’s prospects.
