Investors Brace for Earnings Amid Trump Tariff Turmoil

The upcoming second-quarter reporting period of U.S. companies has investors intensely monitoring the effects of President Trump's intensifying trade conflict.

The LSEG predicts earnings growth will decrease to 5.8% year-over-year from the first quarter's 13.7% according to LSEG. The dollar's weakening provides some protection against the negative effects but new tariffs create additional uncertainty. The president has increased copper tariffs to 50% while semiconductors and pharmaceuticals await their turn for additional duties. The United States has imposed higher tariffs on fourteen countries which will begin on August 1.

The S&P 500 maintains its position near historical peaks at 22 times forward earnings which exceeds the 10-year average of 18. The market worries about maintaining high stock prices because profit growth shows signs of slowing down.

The United States has reached agreements with Vietnam and the UK as its only two trade deals so far. The ongoing uncertainty has forced businesses to postpone important decisions which creates additional uncertainty about the future.

The first quarter showed companies demonstrated resilience according to Truist Advisory's Keith Lerner. The main uncertainty revolves around whether the first quarter's resilience will prove short-term because tariff impacts have not fully materialized.

The market awaits JPMorgan's July 15 earnings release which will provide essential information about how companies handle policy changes and rising expenses and the developing threat of worldwide trade deceleration.