S&P500 Forecast: Bank Earnings Offer Relief as US Stock Investors Eye Tariff Risks

Stock Futures Stabilize as Traders Digest Tariff Escalation and Bank Earnings

U.S. stock futures held steady early Friday, with investors cautiously assessing the latest tariff actions from Washington and Beijing following a volatile trading week. Dow futures hovered near breakeven, while S&P 500 and Nasdaq-100 futures each ticked up 0.1%, signaling a tentative tone as traders weighed economic uncertainty and strong earnings from major banks.

How Are Tariffs Impacting Sentiment Across Markets?

The tariff standoff between the U.S. and China remains the central theme. President Donald Trump slashed most duties to a 10% blanket rate, excluding China, which now faces a punishing 145% tariff. In response, China hiked its own tariffs on U.S. goods from 84% to 125%. While initial reactions were negative, sentiment improved after the European Union announced its trade envoy would visit Washington for negotiations.

Still, Thursday’s session saw sharp losses: the S&P 500 fell 3.46%, the Dow shed over 1,000 points, and the Nasdaq dropped more than 4%. These moves came just one day after Wednesday’s historic rally, driven by a temporary tariff reprieve.

What Are Analysts Saying About the Tariff Fallout?

Market strategists are warning that even reduced tariffs are a headwind. Argent Capital’s Jed Ellerbroek said the uncertainty from 90-day windows offers little reassurance for markets or consumers, citing risks of higher inflation and slower growth.

Krishna Guha of Evercore ISI described Thursday’s sell-off as “rare, ugly and worrying,” pointing to synchronized declines in equities, bonds, and the U.S. dollar. Guha said markets are demanding clearer policy direction, either via fresh negotiations or an end to tariffs outside of China.

Which Stocks Are Reacting to Earnings Reports?

Bank stocks provided some relief. JPMorgan rose 1.3% premarket after beating revenue estimates with $46.01 billion, well above projections. CEO Jamie Dimon acknowledged economic headwinds but stressed the firm’s readiness for multiple outcomes.

Wells Fargo added about 1% following a 16% increase in quarterly earnings, boosted by wealth management and investment banking. Morgan Stanley also gained over 1% on strong results, posting $2.60 per share versus a $2.20 estimate.

What Should Traders Watch Next?

Despite this week’s sharp swings, major indexes are on track for solid weekly gains: the S&P 500 up 3.8%, Nasdaq 5.1%, and Dow 3.3%. However, these gains barely offset losses since early April when the reciprocal tariff strategy was announced. Treasury yields also reflect ongoing tension, with the 10-year yield rising to 4.456%. Traders should keep a close eye on upcoming trade talks and potential tariff revisions, which remain the market’s main catalyst.

More Information in our Economic Calendar.