US Stocks Likely To Open Higher As Trump May Soften Tariff Plans: Analysts Brush Off Bear Hug Fears

U.S. stock futures gained on Monday, continuing the momentum from Friday’s rally. Futures of major benchmark indices were in the green in premarket trading, pointing to rising bullish sentiments among investors.

The markets will look towards the Trump administration’s actions closely this week – reports suggest that the government could limit the scope of the planned tariffs.

While the Trump administration is still expected to launch reciprocal tariffs against major trading partners of the U.S., critical industries like automobile and semiconductors are no longer expected to be hit by tariffs, for the time being, according to a Bloomberg report.

The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF, which track the S&P 500 index and Nasdaq 100 index, respectively, gained in premarket on Monday. The SPY was up 1.06% to $569.98, while the QQQ gained 1.29% to $486.32, according to Benzinga Pro data.

Cues From Last Session:

U.S. stocks settled higher on Friday, with the S&P 500 recording slight gains during the session. The broad-market S&P 500 also reported gains last week after recording losses for four straight weeks. The Nasdaq gained 0.2%, while the Dow added 1.2% during the week.

FedEx Inc. FDX shares dipped more than 6% on Friday after the company’s third-quarter adjusted EPS results missed analysts’ expectations.

Shares of Nike Inc. NKE fell more than 5% on Friday after the company reported third-quarter financial results.

Most sectors on the S&P 500 closed on a negative note, with materials, real estate, and utilities stocks recording losses on Friday.

However, communication services and consumer discretionary stocks bucked the overall market trend, closing the session higher.

Insights From Analysts:

Analysts sought to brush aside concerns of a bear market, stating that it’s not as much of a concern and that it is likely a rotational behavior.

“Statistically, this type of action is extreme and typically comes at the end of a bear market in a waterfall sell-off and not right after an all-time high. A simple reflexive rebound to the 20-day moving average would wipe out half the decline,” said Ivan Martchev, investment strategist at Navellier & Associates.

Martchev pointed to a drastic decline in VIX, also known as the fear gauge index, which fell nearly 10% and 11.72% in two sessions last week.

He added that the chances of the S&P 500 making an all-time high in the second quarter this year are “better than ever,” but this is contingent on President Donald Trump registering a few trade war wins.

Ryan Detrick, chief market strategist at Carson Group, brushed aside bearish concerns, too.

He pointed to the sharp 34% decline in the S&P 500 five years ago on this day due to the COVID-19-related shutdowns.

“The S&P 500 was up nearly 200% (total return) earlier this year off those lows. Remember that the next time you hear some scary headlines,” he said.

Upcoming Economic Data

Here’s what investors will keep an eye on this week:

• On Monday, the S&P services PMI and manufacturing PMI are scheduled to be released at 9:45 a.m. ET.
• On Tuesday, the S&P Case-Shiller home price index for 20 cities is scheduled to be released at 9 a.m. ET.
• Consumer confidence and new home sales data are scheduled to be released at 10 a.m. ET.
• On Wednesday, durable goods orders data is set to be released at 8:30 a.m. ET.
• St. Louis Fed President Alberto Musalem is scheduled to speak at 1:10 p.m. ET.
• On Thursday, initial jobless claims data, second revision of GDP, advanced U.S. trade balance in goods, and advanced wholesale inventories data are to be released at 8:30 a.m. ET.
• Pending home sales data is set to be released at 10 a.m. ET.
• Richmond Fed President Tom Barkin is set to speak at 4:30 p.m.
• On Friday, personal income, spending, personal consumption expenditure index, and core PCE index are scheduled to be released at 8:30 a.m. ET.
• Consumer sentiment data is scheduled to be released at 10 a.m. ET.

Stocks In Focus:

• Tesla Inc. TSLA continues to remain in focus on Monday, rising nearly 4% in pre-market trade and extending gains from Friday.
• The AZEK Company Inc. AZEK gained over 18% pre-market after James Hardie Industries Plc. JHX announced plans to acquire the company in a $8.75 billion deal.
• MicroAlgo Inc. MLGO gained over 42% pre-market, reversing the 19% dip on Friday when it announced a new stock offering to service a convertible bond.
• Castellum Inc. CTM gained nearly 14% after the company announced a $4.5 million offering pricing.
• 23andMe Holding Co. ME tumbled over 40% after the company initiated involuntary Chapter 11 proceedings.
• Investors are awaiting earnings results from KB Home KBH, Intuitive Machines Inc. LUNR, and Enerpac Tool Group Corp. EPAC today.

Commodities, Gold And Global Equity Markets:

Crude oil futures were trading higher in the early New York session by 0.75% to hover around $68.78 per barrel.

Gold futures gained 0.41% to hover around $3,060.91 per ounce.

10-year treasury yields edged up by 0.029% to hover at 4.281%.

Asian markets closed on a mixed note on Monday. While Taiwan Weighted and KOSPI fell over 0.4%, Hang Seng rose 0.90%, and Shanghai Composite edged up by 0.15%.

European markets were similarly mixed in early trade.

Read Next:

Photo courtesy: Shutterstock