S&P 500 Forecast: SPX unchanged after hotter PPI & as GameStop soars

US futures

Dow future 0.07% at 39468

S&P futures 0.1% at 5225

Nasdaq futures 0.11% at 18215

In Europe

FTSE 0.30% at 8406

• Dax -0.14% at 18715
• US PPI rose 0.5% MoM vs -0.1% previously
• Federal Reserve Chair Jerome Powell to speak
• GameStop rises as mem-stock mania shows signs of returning

Hotter PPI ahead of tomorrow’s CPI

US stocks are heading for a muted despite the weaker-than-expected US producer prices and as the meme stock rally heats up.

US producer prices rose 0.5% Month over Month, above the 0.3% expected and higher than the revised fall of 0.1% in the prior month. The data comes ahead of the closely watched consumer price index due tomorrow and as concerns over sticky inflation remain. Hotter-than-expected inflation in the first quarter raised concerns over the Fed's ability to cut rates this year.

Further signs of persistent inflation in April are likely to further decrease expectations of a rate cut, which could spark strong stock market losses and lift the US dollar.

Recent Fed speakers have warned about sticky inflation and the need for more evidence that inflation is moving back towards the 2% target.

Attention will now turn to Fed chair Jerome Powell, who is due to speak. His comments will be watched closely for clues over the timing of the first-rate cut.

Corporate news

GameStop is set to open over 100% higher adding to 72% gains in the previous session. The return of Roaring Kitty, the trader who sparked the member stock mania of 2021, has revived the meme stock rally. Social media influencer Keith GILL became a figurehead in the trading frenzy of meme stocks three years ago as retail traders took aim at institutional investors.

Home Depot is set to open lower after the home retailer posted earnings that beat expectations and revenue that missed estimates. Home Depot posted EPS of $3.63, ahead of the $3.60 expected, and revenue was $36.42 billion below the $36.66 billion expected. The firm cited customers delaying major home projects due to high interest rates.

Alibaba dropped almost 5% after the Chinese e-commerce company reported an 86% drop in profit in the fiscal Q4; however, it did beat revenue estimates.

S&P 500 forecast – technical analysis.

After rising above 5100 the S&P500 has continued to grind higher to current levels of 5225. Buyers supported by the RSI above 50 will look to extend gains to 5277 and fresh all-time highs. On the downside, support can be seen at 5200, today’s low, and below here at 5150 the 50 SMA. It would take a move below 5100 to negate the near-term uptrend.

FX markets – USD falls, GBP/USD rises

The USD is rising after US PPI inflation came in hotter than expected, raising concerns over the Federal Reserve's ability to cut interest rates.

EUR/USD is rising after encouraging data from Germany. This ZEW economic sentiment gauge for the eurozone's largest economy came in stronger than expected at 47, raising optimism over a recovery in the region.

GBP/USD is rising despite UK jobs data tentatively supporting the view that the Bank of England will start to cut rates in the coming months. Unemployment rose by 4.3%, while wage growth, including bonuses, rose to 5.9% from an expected 6%. Meanwhile, the number of payroll employees fell to its lowest level since 2020.