US stocks are poised for an upward start as US and China prepare to meet in Switzerland. President Trump has suggested an 80% tariff, reduced from 145%, which could still lead to inflation and unemployment as small businesses may suffer.

The futures indicate potential gains: Dow up 112 points, S&P up 21 points, and NASDAQ up 95 points. Entering today, the S&P and NASDAQ are slightly lower by 0.40% and 0.28%, respectively. However, both remain above their 50-day moving averages at session lows. For the S&P, this average is 5555.65, while the 200-day moving average target is 5747.76.

Premarket Performance

The Dow industrial average is up 0.12% heading into Friday. In premarket trading: Nvidia shares are up 0.34% and 2.51% for the week. Alphabet is down 0.34% today and 5.94% for the week. Microsoft shares rose 0.36% today and 0.66% this week. Meta increased by 1.01% today and 0.16% this week. Apple gained 0.66% today but is down 3.83% weekly. Amazon shares rose by 0.53% today and 1.11% this week. Tesla gained 1.82% today but dropped 0.83% by yesterday’s close.

What we’re seeing here is an early signal of improved sentiment ahead of diplomatic talks in Switzerland. Markets have latched onto the idea that Washington may soften its previous stance on trade penalties, especially that sharp drop from a proposed 145% tariff to 80%. While 80% remains steep by historical standards, the reduction from prior expectations has cooled some of the harsher inflationary concerns that traders had priced in.

However, the backdrop remains tricky. Tariffs of that size, whether or not they go through, can weigh on small enterprises with thinner margins, often the first to feel the pinch of higher input costs. Inflation then becomes less a question of energy or labour, and more about imported intermediate goods, which can cascade through to consumer prices. Weakness in employment growth could follow, especially if firms begin cutting costs in response.

Now, looking at the broader picture through the futures market, there’s clear interest in buying into strength. The Dow pointing higher by over 100 points reflects a confidence that any policy developments out of Switzerland will err towards a cooling of recent hostilities—although traders should be mindful that no agreement has yet been signed. The early moves in the S&P and NASDAQ, too, bring them back above pullback levels seen earlier in the week. Their holding above the 50-day averages means short-term momentum hasn’t broken down entirely. However, the next resistance level, particularly the 200-day average in the S&P noted at 5747.76, will act as a technical marker for mean-reversion strategies.

Market Rotation and Strategies

We’re also following a noticeable rotation beneath the surface. Walmsley’s gains today, even if modest, demonstrate defensive buying, though a 5.94% slide over the week suggests deeper profit-taking or reallocation might be underway. Meanwhile, the movement in Pichai’s and Musk’s firms, though going in opposite weekly directions, points to shorter-term positioning over longer macro sentiment. The pickup in Bezos’s equity is also worth noting since a consolidation of strength there could pull broader consumer-related sectors slightly higher, given its spillover effect.

Derivatives traders should be watching volatility closely now—this mix of diplomatic uncertainty and technical support suggests a window for intermediate-range positioning but with readiness to unwind quickly. We should be treating support levels as tactical entry zones but not relying on them long-term. Option premiums could move sharply around the tariff decision, and spreads tied to mega-cap tech need adjusting in line with these week-to-date patterns. This includes careful hedging around weekly expiries that overlap with policy updates.

As Powell’s index continues to stabilise above 5555, daily closes and volume around that level may act as a short-term barometer. Algorithmic models may already be recalibrating, so discretionary traders will need to keep firm stops in place. Watching inputs from Geneva, and how quickly bond markets react to any signs of economic weakening, should guide us on whether to lean heavier into growth exposure or reduce it further.

In short, pricing risk correctly over the next week relies on staying close to data, keeping risk lean, and following through on rotations that look durable and not just reactionary.

Create your live VT Markets account and start trading now.