S&P500 Forecast: SPX steady, Boeing tumbles

US futures

Dow futures -0.37% at 37327

S&P futures +0.06% at 4701

Nasdaq futures +0.20% at 16334

In Europe

FTSE -0.05% at 7680

Dax -0.28% at 16640

Stocks hold steady after snapping a 9-week winning run
Fed rate cut expectations remain in focus
Boeing flies lower as planes are grounded
Oil tumbles after Saudi cuts its selling price to Asia

US inflation data in focus this week

US stocks point to a flat open and a cautious start to the new week. Investors brace for inflation data and the beginning of the Q4 corporate earning season.

Geopolitical tensions also remain a key focus as disruptions in the Red Sea have increased shipping costs in Europe and as the Israel-Hamas war threatens to tip over into Lebanon.

The US economic calendar is relatively quiet today as investors continue to mull over Friday's mixed jobs report. While headline job creation was stronger than expected, the previous two months were downwardly revised. Wage growth will be something that the Fed will keep an eye on. US inflation data is due out on Thursday and is expected to show that inflation cooled further to its lowest level since mid-2021.

Cooling inflation could revive aggressive Federal Reserve rate-cut bets. Currently, according to the CME fed watch tool, the market is pricing in around a 60% probability of a rate cut in March. This is down from around 75% just a week ago.

Even so, the market still seems ahead of the curve, with the Fed indicating just 75 basis points worth of cuts this year compared to the market, which points to around 135 basis points cuts in 2024.

In light of the considerable difference, hard data and Fed, speakers will be more in focus than usual for further clues over the timeline for the first Fed rate cut.

Over the weekend, Dallas Fed President Lorries Logan made hawkish comments supporting tight financial conduct conditions for longer. Atlanta fed President Raphael Bostic is due to speak today.

Corporate news

Boeing flies lower after the Federal Aviation Administration ordered a grounding of 170 Boeing jets after a mid-air door blowout of a 737 Max jet last week.

Nvidia is rising premarket on reports that the chipmaker will begin mass production of an AI chip specifically for the Chinese market in Q2 of this year.

Shell ADRs are falling 0.9% after the oil major said it would book an impairment charge of $4.5 billion in Q4.

S&P 500 forecast – technical analysis

The S&P 500 recovered from 4660, last week’s low. The long lower wick on Friday’s candle indicates little selling demand at the lower price. Buyers must rise above resistance at the 4700 round number to extend gains towards 4745 and 4800. Failure to rise above 4700 could see sellers look to test 4660 again, with a break below here bringing 4600 into focus.

FX markets – USD rises EUR/USD falls

The USD is holding steady after rising across the previous week as investors look cautiously ahead to inflation figures. Last week, the US dollar rallied as the market reined in aggressive Fed rate cut bets after a series of stronger-than-forecast data and as Fed speakers kept a hawkish tone.

EUR/USD Is holding steady around 1.0950 amid mixed data from the region. While German trade data was better than expected, German factory orders rebounded by less than expected, and eurozone retail sales fell in line with forecasts. The data hardly points to a roaring economy, but with inflation ticking higher, the ECB may not cut rates as soon as it was initially expected.

GBP/USD Is holding steady, just above 1.27, amid a quiet day for the UK economic calendar. The pound is finding some support from the EC survey, which showed that the jobs market improved slightly in November as employers raised pay and recovered some of their appetite for hiring.

EUR/USD -0.03% at 1.0944

GBP/USD -0.04% at 1.2707

Oil drops as Saudi lowers its Asia selling price

Oil prices are slumping after Saudi Arabia cut the official selling price for its light crude to a 27-month low reinforcing signs of a softer physical market.

The $2 a barrel reduction was deeper than expected and came amid lackluster Chinese appetite and increased global supplies.

2023 saw oil post its first annual decline since 2020 as non-OPEC production ramped up and amid rising concerns over the demand outlook from China, the world’s largest oil importer.

Concerns surrounding the sharp price cut overshadowed worries generated by rising geopolitical tensions in the Middle East.

WTI crude trades -3.3% at $71.35

Brent trades -3% at $6.20

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