Market Pulse with Dan Sheehan

Good Morning Investors,

Markets have entered Tuesday with cautious optimism as earnings season gains pace and tariff speculation continues to dominate headlines. After a tech-led bounce on Monday, today’s focus shifts to auto sector reprieve rumors, new probes into pharma and chips, and early Q1 earnings signals — all against a backdrop of geopolitical friction and mounting market volatility.

This week is shaping up to be a critical one for setting expectations. Several major corporates are due to report earnings amid ongoing ambiguity over trade policy, manufacturing resilience, and the consumer’s capacity to spend. Last week’s brief tariff pause sparked one of the strongest one-day gains in recent memory, but the policy fog remains thick. Trump’s evolving stance — ranging from 145% tariffs on Chinese imports to weekend walk-backs of tech exemptions — has left both companies and markets caught in a whipsaw.

Volatility is now a feature, not a bug. As we watch companies grapple with this uncertainty in their earnings guidance, we’re also seeing long-term opportunities open up — particularly in sectors that were overheated six months ago and are now re-entering value territory.

BEFORE THE BELL

Wall Street futures were modestly higher, helped by hopes for potential tariff exemptions on autos after President Trump hinted at a broader carve-out. The S&P and Nasdaq futures inched up 0.1% and 0.2%, respectively, while the Dow hovered near flat. Monday’s rally was fueled by the tech sector, aided by Customs guidance showing temporary tariff exclusions on electronics, smartphones, and GPUs. Still, doubts remain, with Trump walking back parts of that narrative over the weekend.

Overseas, Japan’s Nikkei rose nearly 1% on a rally in automakers. In contrast, Chinese and Hong Kong markets were flat as investors awaited more clarity from Washington and Beijing. Oil dipped slightly after both the IEA and OPEC cut their demand outlooks. Gold rose, while the dollar index slipped again amid Treasury sell-offs.

CORPORATE EARNINGS ROUNDUP

Bank of America posted a 90-cent EPS on strong trading and interest income, beating estimates. Equities trading jumped 17% year-on-year, as tariff volatility created ample opportunity across desks. Investment banking was softer, down 3%, but the net was positive. Shares rose in pre-market.

Johnson & Johnson also reported above expectations, led by continued momentum in cancer drug sales, particularly Darzalex. EPS came in at $2.77 vs. $2.59 expected, with CFO Joe Wolk reaffirming stronger performance in medtech anticipated in the second half of the year.

These results support the consensus that Q1 earnings likely held up well, despite the looming April tariff shocks. With nearly 7.3% growth expected this quarter (FactSet), we could see earnings top 10% once full results are in — continuing a trend where results routinely beat estimates. The standout sectors so far are Health Care and Tech, particularly Semiconductors, where export volatility is a headwind but demand remains robust.

However, the story for investors lies not in what’s just been reported — but in what’s not being said. Many companies are pulling or softening forward guidance. Delta, Walgreens, and others have already refused to reaffirm full-year expectations. With the Trump administration’s trade policy evolving almost daily, CEOs face too many unknowns to offer precise forecasts. The risk isn’t Q1, it’s Q2 and beyond.

And that’s where the market could remain skittish. Forward EPS guidance is more negative than usual, and companies across sectors are flagging uncertainty around margins, consumer demand, and investment planning. We are witnessing earnings resilience but guidance fragility, which creates room for valuation dislocation—and opportunity.

STOCKS TO WATCH

AMD plans to begin production at TSMC’s Arizona fab — its first U.S.-based manufacturing. In a charged tariff environment, this is a strategic shift that mirrors Apple and Nvidia’s efforts to reshore critical chipmaking.

Lowe’s will acquire Artisan Design Group in a $1.3 billion move to expand in professional services, providing differentiation as home improvement spending slows.

Boeing shares dipped after Bloomberg reported China will suspend new jet deliveries in retaliation to U.S. tariffs. This will have downstream implications across aerospace.

Honda plans to shift more production from Mexico and Canada to the U.S. to avoid new auto tariffs — a decision that could accelerate reindustrialization trends.

ANALYSTS’ RECOMMENDATIONS

STRATEGIC OUTLOOK

This market is still in a bottoming phase, not a rebound. Volatility will be acute, and that includes upward moves that don’t yet mark a sustained trend. Investors should expect sharp relief rallies followed by further retracement. A higher low doesn’t guarantee we’re heading straight back to the highs.

Still, I maintain this is a growth scare, not a recession. The labor market is softening, not collapse. Inflation is ticking lower, earnings (for now) are holding up, and disinflationary signals are forming a backdrop for eventual Fed easing.

For long-term investors, this environment offers opportunity. The market is punishing both negative and positive surprises more than usual, which is typical of sentiment-driven bottoms. Look to quality names with secular growth stories and resilient balance sheets — the leaders of the next cycle are likely trading at 10–15% discounts today.

As hedge funds begin to disclose their 13Fs next month, I suspect we’ll see many well-known investors leaning into this dislocation. They’ve been talking down these names — they’ll soon be buying them.

Please feel free to reach out to me on LinkedIn or by email if you would like help navigating this market environment or have any planning-related questions.

Dan Sheehan

[email protected]

This newsletter is for informational purposes only and should not be considered as investment advice. Please consult with your financial advisor about your specific situation.