US stock index futures were sharply higher in early European trade. This morning’s gains built on those from yesterday. US markets staged a powerful recovery on Tuesday, wiping out Monday’s steep losses in a full-blown reversal of sentiment.
The rebound came after Treasury Secretary Scott Bessent hinted at a possible de-escalation in the trade war with China. His comments ignited a broad-based rally and sparked a renewal in risk appetite.
By the close, all major US indices were up over 2.5% each, shaking off the turmoil of Monday’s session. The momentum extended after hours, with futures jumping again on remarks from President Trump who said he had: “no intention” of firing Fed Chair Powell.
This was either Mr Trump clarifying what he meant by last week’s pointed comments, or a sharp pivot away from how they were interpreted by the mainstream media. In either case, they were enough to quash investor fears of a full-blown war of words between the President and the US central bank.
Adding to the bullish tone was Tesla, which gained 6% after hours, despite confirming a miss in quarterly earnings, along with a 20% year-on-year sales decline. These disappointments were clearly priced in, and the stock responded positively to the fact that there were no additional negative surprises.
Today sees another batch first quarter results including majors such as Philip Morris, IBM, AT&T, Boeing and Texas Instruments. Alphabet reports after tomorrow’s close, while the bulk of the ‘Magnificent Seven’ reports next week.
Forward guidance is a crucial determinant in how investors react to quarterly results. Positive guidance will often contribute more to a bounce in a company’s stock price than its numbers on earnings and sales. But this time round there will be limited visibility for corporate executives given the continued uncertainty around the Trump administration’s tariffs.
Investors will likely be prepared to look beyond this lack of guidance, placing more weight on the actual quarterly results themselves, even as these are looking backwards. For now, the major US stock indices are pointing higher as they recover from their very oversold conditions at the beginning of this month.
Looking at the daily MACD on the S&P 500 chart, it shows that there’s plenty of room to the upside. But investors must remain on their guard as the situation is very uncertain, as markets react violently to the running commentary coming from the Trump administration.
Source: TN Trader
