On Wednesday, S&P Futures experienced an uptick after a tumultuous trading session, as market participants processed recent updates regarding the U.S.-China trade conflict and anticipated forthcoming quarterly earnings reports from significant corporations. Futures associated with the Dow Jones Industrial Average increased by 188 points, representing a rise of 0.4%. S&P 500 futures advanced 0.6%, while Nasdaq 100 futures increased by 0.8%. Bank of America, Morgan Stanley, and PNC Financial are scheduled to announce their earnings prior to the market opening. J.B. Hunt Transport is scheduled to report following the market’s close. These reports follow a series of unexpectedly positive outcomes from Goldman Sachs and Wells Fargo, among others, on Tuesday.

However, even if earnings exceed expectations, Art Hogan posits that equities are likely to remain in a sideways trend from this point forward, fluctuating around historical peaks as long as uncertainties surrounding the trade conflict continue to loom. The chief market strategist noted that the U.S. government shutdown presents an additional headwind for the market. “The longer it persists, the greater the initial economic harm it inflicts. This development is impacting confidence levels. It is probable that this will influence the guidance provided by Corporate America during the conference calls,” he stated. “Earnings seasons may indeed surpass expectations universally, with the typical proportion of firms that outperform and provide upward guidance and so forth.” I do not believe that this serves as a tailwind, at least not until we approach the government reopening and potentially gain more clarity regarding our trade relationship with China.

Concerns regarding trade resulted in a volatile trading session on Tuesday. The S&P 500 attempted to stage a comeback but ultimately closed lower after President Donald Trump threatened China with a cooking oil embargo late in the session as retaliation for Beijing not purchasing U.S. soybeans. On Tuesday, the benchmark experienced an increase of up to 0.4% and a decrease of as much as 1.5%. The Nasdaq Composite experienced a decline, yet it concluded the session significantly above its lowest point. The Dow Jones Industrial Average exhibited a notable increase of just over 200 points, despite experiencing a decline of as much as 1.3% on Tuesday morning.

Tuesday’s news marked a significant escalation in the trade tensions between the United States and China. On Monday evening, China imposed new sanctions on five U.S. subsidiaries of the South Korean shipbuilder Hanwha Ocean. This came in the wake of Trump’s threats last Friday to impose a further 100% tariff on any goods originating from China, following Beijing’s implementation of stringent export controls on rare earth minerals. According to Jamieson Greer, Trump’s tariffs may be implemented as early as November 1, contingent upon China’s forthcoming actions. “A significant amount hinges on the actions of the Chinese,” Greer stated. “The decision to undertake this significant escalation rests with them.”