Tariffs and AI to impact tech earnings: Empower's Norton warns.

As tech earnings season begins, Empower Chief Investment Strategist Marta Norton highlights tariffs as a "wild card" factor to watch. She will also be monitoring the ongoing AI narrative.

As tech earnings season begins, Empower Chief Investment Strategist Marta Norton highlights tariffs as a "wild card" factor to watch. She will also be monitoring the ongoing AI narrative.

The ongoing trade tensions and tariffs imposed by the U.S. President Donald Trump will continue to be a focal point for investors. The U.S. has implemented tariffs on the European Union and Mexico, which have the potential to disrupt global supply chains and impact corporate earnings. The impact of these tariffs will be closely watched by investors and financial analysts, as they could influence the performance of companies and sectors that are heavily exposed to international trade [1].

In response, European Commission President Ursula von Leyen announced that the EU would suspend its retaliatory 30% tariff on American products, which was set to take effect in July, until Aug. 1. President Trump has also announced plans to implement reciprocal tariffs for Canada, Mexico, and the European Union (EU), beginning Aug. 1. These include a 30% tariff for the EU and Mexico, and a 35% tariff for Canada. Qualified products under the U.S.-Mexico-Canada Agreement would remain exempt [1].

The technology sector is the linchpin of Q2 earnings resilience, with AI infrastructure spending driving growth despite broader macroeconomic challenges. Key Catalysts include semiconductor strength, cloud and software dominance, and structural shifts in traditional consumer tech. Companies like Micron Technology (MU) and ASML Holding (ASML) have reported strong earnings driven by AI demand and advanced chip production. Middle-market tech firms also saw earnings growth, reflecting strong demand for B2B software [2].

The financial services sector is split between growth and contraction, with select areas offering opportunities. Companies like Capital One (COF) and Progressive (PGR) have seen earnings growth driven by higher loan demand, equity market gains, and AI-driven efficiency. However, diversified banks like JPMorgan Chase (JPM) faced a decline due to a prior-year Visa shares gain, while Citigroup (C) beat estimates with a rise in earnings [2].

Investors should monitor the Fed Chair speculation and the ongoing AI narrative, as these factors could influence market volatility and corporate earnings. The race to replace Fed Chair Jerome Powell by May 2026 has introduced uncertainty into markets, with candidates like Treasury Secretary Scott Bessent advocating for rate cuts and former Fed Governor Kevin Warsh creating uncertainty. The market's reaction hinges on perceived credibility, with a nominee perceived as politically pliant triggering a sell-off in the dollar and long-term Treasuries [2].

In conclusion, as tech earnings season begins, investors should watch for tariffs and the ongoing AI narrative. The Fed's credibility battle and earnings momentum will dictate near-term moves, but sectors aligned with secular trends in AI and productivity remain the safest bets.

References:
[1] Specialty Fabrics Review. (2025). Tariffs: A Wild Card Factor to Watch. Retrieved from https://specialtyfabricsreview.com/2025/07/18/tariffs-5/
[2] AInvest. (2025). Market Resilience: Fed Chair Speculation and Earnings Season. Retrieved from https://www.ainvest.com/news/market-resilience-fed-chair-speculation-earnings-season-tech-financials-lead-charge-2507/