Dow Jones Futures: Trump's Tariff Flexibility and 5 Stocks to Watch

The Dow Jones Futures are in the spotlight as President Donald Trump's tariff plan introduces a new layer of uncertainty to the market. Trump's recent comments on "flexibility" in his reciprocal tariff plan have investors on edge, wondering how this will impact their portfolios. With the April 2 start date for these tariffs looming, the market is bracing for potential volatility. Let's delve into the implications of Trump's tariff plan and identify five stocks that are near buy points, offering potential opportunities for investors.

The Impact of Trump's Tariff Plan

Trump's tariff plan, which aims to assign tariff rates to all countries with their own tariffs on U.S. goods, has already sparked investor uncertainty. The plan, dubbed "America's liberation day" by Trump, could lead to retaliatory tariffs from other countries, further complicating the global trade landscape. The administration's insistence on reciprocity means that countries with non-tariff trade policies, such as value-added taxes, could also face new duties.

The market has already shown signs of volatility in response to Trump's tariff announcements. U.S. stock futures wavered on Tuesday after Trump's decision to go ahead with tariffs on Canada and Mexico, and impose an additional 10% levy on certain goods. This decision led to sharp losses in the market, with the Nasdaq Composite index at one point down 10% from its December record high. Similarly, Wall Street's main stock indexes closed sharply lower on Monday after Trump announced the start of 25% tariffs on Canada and Mexico.



Strategies for Navigating Tariff Uncertainty

Given the uncertainty surrounding Trump's tariff plan, investors need to adopt strategies to navigate the potential volatility. Diversification is key, as it can help mitigate the impact of tariffs on any single sector or region. Investors should consider diversifying their portfolios by investing in a mix of domestic and international stocks, as well as other asset classes like bonds and commodities.

Hedging strategies, such as options or futures contracts, can also protect portfolios against potential losses due to tariff-related volatility. Staying informed about the latest developments in trade policy and adjusting strategies accordingly is crucial. Investors should monitor news about potential tariff negotiations or changes in Trump's tariff plan.

Investing in defensive sectors, such as healthcare and consumer staples, can provide a safe haven during periods of market volatility. These sectors tend to be less affected by economic downturns and could offer stability in uncertain times.

Five Stocks Near Buy Points

Despite the uncertainty, there are opportunities for investors to capitalize on potential gains. Here are five stocks that are near buy points and could offer attractive investment opportunities:

1. Tencent Holdings Ltd (TCEHY):
- Tencent is a massive messaging and gaming giant, with its WeChat super app being the envy of the world. The company's earnings rebounded in 2023, with EPS growth accelerating for six straight quarters. Tencent stock has rebounded strongly since early March, building the right side of a 17-month, 38%-deep cup-with-handle base. The buy point is 50.89, and clearing the June 20 intraday high of 49.67 would offer an early entry.

2. pdd holdings (PDD):
- pdd Holdings is an e-commerce titan that has benefited from the growth of online shopping in China. The company's earnings surged 941% and 108% in the last two quarters, along with revenue gains of 42% and 27%. PDD stock broke out of a base-on-base formation in mid-May, hitting a 52-week high of 22.74 on May 22. Shares have retreated back below the buy point and slightly below the 50-day line, but a move above the prior 21.32 buy point would be actionable.

3. BYD Co. Ltd (BYDDF):
- BYD is a world-leading electric vehicle (EV) manufacturer, producing fully battery electric vehicles (BEVs) and plug-in hybrids (PHEVs). The company has been fighting for the BEV-only crown with Tesla and will likely regain that title this quarter. BYD stock slumped from early August to the end of January, but has since bounced back. Shares are slightly above a short consolidation, with a 29.72 buy point.

4. Kanzhun Ltd (BZ):
- Kanzhun provides online recruitment services via its mobile app, BOSS Zhipin, connecting companies and job seekers. The company is growing rapidly, with earnings surging 941% and 108% in the last two quarters, along with revenue gains of 42% and 27%. BZ stock broke out of a base-on-base formation in mid-May, hitting a 52-week high of 22.74 on May 22. Shares have retreated back below the buy point and slightly below the 50-day line, but a move above the prior 21.32 buy point would be actionable.

5. Trip.com Group Ltd (TCOM):
- Trip.com is a China-based online travel site operator that has benefited from a travel boom after China's long Covid restrictions were lifted in late 2022. Q1 2024 earnings jumped 86% vs. a year earlier, with revenue up 23%. TCOM stock broke out past a cup base in late February on Q4 2023 earnings, then gapped out of a flat base, base-on-base pattern in early April. Shares hit a six-year high of 58 on May 20, but pulled back and have broken decisively below the 50-day line, back near the top of the flat base. If Trip.com can recover the 50-day line, it would likely offer a new base.

Conclusion

The implementation of Trump's reciprocal tariffs is likely to have a significant impact on various sectors and specific stocks. Investors can position their portfolios to capitalize on potential opportunities or mitigate risks by diversifying their portfolios, using hedging strategies, investing in domestic companies, investing in ETFs, and closely monitoring policy changes. By following these strategies, investors can navigate the uncertainties created by tariffs and protect their portfolios from potential losses.

Ask Aime: How will President Trump's tariff plan impact the stock market and which stocks are near buy points?