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Tariffs Weigh On Stocks, Market Set To Pivot Towards Earnings Season

Stocks were down yesterday on increased tariff concerns.

After the White House readied another $200 billion in tariffs on China, stocks predictably sold off on the news. But not that bad. In fact, none of the major indexes were even down a full percent. The Dow was the hardest hit and only gave up 0.88%.

But as I've been saying, analysts are putting the potential hit to S&P companies at just a few percent of forward earnings growth, which will still mean double-digit earnings gains, and in turn, the fuel for stocks to keep moving higher.

While that was happening, crude oil dropped by 6% with Brent futures trading at $74.09 after hitting close to $80 less than two weeks ago. As more supply comes onto the market, prices should continue to drop. Between $60-$70 would be ideal. That still leaves plenty of profit for producers and provides plenty of relief for users.

But the market will likely keep its focus on Q2 earnings season. With the market's median gain during earnings season in excess of 2% since this bull market began, this is where the real action is. And being in the right stocks could mean significantly larger gains than that.

Companies are already starting to report, even though the official start to earnings season doesn't begin until Wednesday, July 18th, when Alcoa reports after the market's close.

Stocks are still up for the week. But it's too early to tell how the week will end.

Nonetheless, with stocks up more than 70% of the time during the aforementioned earnings seasons, the smart money is for higher prices again this time around.

See you tomorrow,

Kevin Matras

Executive Vice President, Zacks Investment Research


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