Forward Guidance Newsletter

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The “tariff trade,” or the market volatility we’ve seen the past couple of weeks as investors evaluate tariff risks, has overshadowed the tail end of earnings season.

However, many analysts still believe US equities have room to grow.

President Trump’s threats have been delayed, not canceled. A 25% tariff on steel and aluminum is set to begin next month, and reciprocal tariffs against various countries are still being planned. Consequently, the news cycle—and the market—are likely to shift focus away from duties temporarily.

In the meantime, Big Tech stocks are beginning to recover from post-earnings dips, yet the S&P 500 is still outperforming the Magnificent Seven.

Amazon’s web services business reported a 37% profit margin in Q4 2024, which is impressive, but investors were not convinced, leading to a more than 4% decline in shares following the report.

Microsoft faced a similar fate, with shares experiencing their worst day since 2022 despite surpassing earnings per share and revenue expectations in their Q4 report.

Google shares dropped by more than 8% after Alphabet missed its Q4 revenue target.

Nevertheless, according to Sevens Report Research founder Tom Essaye, as long as economic data remains in the “Goldilocks” range, the market should show resilience. However, if the Fed indicates that this pause is likely to extend for a long period, we could face challenges.