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There isn't much conviction in the early going, partly because there has been a lot of conviction in the rebound off the April 7 low. Since then, the S&P 500 has surged 14.4%. Market participants are now in a mode of waiting to see if that move was justified, and they are looking at economic data and earnings news to act as their guide.
Currently, the S&P 500 futures are down 21 points and are trading 0.4% below fair value, the Nasdaq 100 futures are down 100 points and are trading 0.5% below fair value, and the Dow Jones Industrial Average futures are up 30 points and are trading 0.1% above fair value.
The hangup for some is that it could be another month or two before the economic data start to provide a more crystallized view of things. Early reports of reduced cargo shipments out of China, however, and various companies pointing to the likelihood of raising prices to mitigate the impact of higher tariff costs, have been a lingering cause for concern that these good rebound times might not last.
A lot is riding on the tariff negotiations, how quickly deals can be struck, and what a deal will ultimately look like. That is still unknown; moreover, China, for its part, has reiterated that it is not engaged with the U.S. in any consultation or negotiations on trade.
The tariff uncertainty has made forecasting life difficult for companies reporting earnings, more so for the full year than the next quarter. Nevertheless, with the overall earnings estimate trend in a state of flux because of the heightened macro uncertainty, investors have been questioning their willingness to pay up for earnings growth that may not materialize.
That is why it hasn't been a straight shot back to the old highs in the wake of some tariff reprieve announcements made by the Trump administration. Reports today indicate the president will soon announce a softening in auto parts tariffs.
That is good news, but it is also only partial news at a time when businesses and the market are pining for a full resolution. Treasury Secretary Bessent said the U.S. will be talking to at least 17 trade partners over the next few weeks.
In the meantime, there has been, and will continue to be, ample vacillation in the market as participants attempt to handicap eventual outcomes. Part of the handicapping today includes a plethora of earnings results from blue-chip companies.
General Motors (GM), which is in the tariff crosshairs, is emblematic of the tariff uncertainty. The automaker topped Q1 consensus earnings and revenue estimates but pushed back a call to discuss its results until May 1, acknowledging that its initial full-year guidance does not contemplate the potential impact of tariffs.
GM was joined by Honeywell (HON), Coca-Cola (KO), Sherwin-Williams (SHW), UPS (UPS), Royal Caribbean (RCL), and Pfizer (PFE) in reporting quarterly results this morning. Reactions have been mixed, as evidenced by the standing of the equity futures market.
There is a lot more earnings news to come this week and a lot more economic data, including the April Consumer Confidence Report and the March JOLTS - Job Openings Report at 10:00 a.m. ET.
