S&P500 Forecast : S&P500 slips after earnings from GOOGL & MSFT

Congress building
Fiona Cincotta
By :  ,  Senior Market Analyst

US futures

Dow futures +0.23% at 33211

S&P futures -0.25% at 4232

Nasdaq futures -0.58% at 14660

In Europe

FTSE +0.2% at 7402

Dax +0.0% at 148723

  • Federal Reserve Chair Powell is due to speak
  • Alphabet falls & Microsoft rises post earnings
  • Meta to report after the close
  • Oil steadies after two sessions of steep losses

Stocks mixed ahead of Fed Powell’s speech

U.S. futures are pointing to a broadly weaker start as investors digest quarterly earnings from both Microsoft and Alphabet and look ahead to a speech by Federal Reserve chair Jerome Powell.

Fed Chair Powell's comments will be crazily scrutinized for clues over the future path for interest rates ahead of next week's central bank interest rate decision.

The market is currently pricing in a 97% probability of the Fed leaving rates unchanged and a 30% probability that the Fed will raise interest rates in the December meeting.

His comments come after data yesterday showed that the US economy continues to show resilience after PMI figures beat analysts' expectations, signaling that the US economy expanded in October.

US earning season continues to ramp up with big tech in focus. A solid-state of corporate earnings and upbeat forecasts yesterday helped the three major U S indices close higher on Tuesday.

Corporate news

Microsoft is rising after posting stronger-than-expected Q1 results. EPS came in at $2.99 versus $2.65 expected on revenue of $56.52 billion versus $54.5 billion expected. Azure cloud revenue growth accelerated after two years of deceleration, helping the stock higher, as did management calls for higher revenue in the current quarter than analysts forecast.

Alphabet is set to open over 6% lower despite beating on the top and bottom lines. Instead, investors were concerned by weaker-than-expected revenue growth in its cloud computing operation.

Sticking with big tech, Meta is due to release earnings after the close and is expected to announce EPS of $3.65 on revenue of $33.45 billion. The results come as the stock trades up 150% year to date.

S&P500 forecast – technical analysis.

The 200 sma continues to limit the upside for S&P500. Buyers need a break above the 200 sma at 4250 in order to expose the 20 sma at 4300 and negate the near-term downtrend. Failure to rise above the 200 sma could see sellers target 4200 the early October low ahead of 4188 the October low, to extend the bearish trend.


FX markets –USD rises, EUR falls

The USD is rising for a second straight day after surprisingly strong US PMI data yesterday fuels expectations that the Fed will keep interest rates higher for longer. Economic exceptionalism in the US keeps demand for the greenback strong. Federal Reserve chair Jerome Powell is due to speak later today.

EUR/USD is falling against a stronger U.S. dollar despite improving German business sentiment. The German Ifo business climate index rose for the first time in five months, climbing to 86.9, up from 85.8 in September, beating forecasts of a rise to 85.9. While business sentiment is seen improving, the mood towards the German economy is still downbeat, and yesterday's PMI data points to a likely recession in the second half of the year.

GBP/USD is falling amid the downbeat market mood and on expectations that the Bank of England is likely to leave interest rates unchanged when it meets on November 2nd. Yesterday's weaker than expected PMI data has raised concerns over the health of the UK economy, where momentum is clearly slowing. The money markets believe that UK rates have peaked and a rate cut is fully priced in by the end of next year.

EUR/USD -0.13% at 1.0575

GBP/USD -0.27% at 1.2130

Oil steadies after steep losses

Oil prices are holding steady after falling quite sharply in the previous two sessions.

Oil prices fell again yesterday amid worries over the demand outlook after weak PMI data in the eurozone and the UK raised concerns over a deeper downturn.

The risk premium is also coming off oil as world leaders pushed for a cease-fire in fighting between Israel and Hamas in Gaza in order for aid to get through. Leaders of Saudi Arabia and the US met to discuss how to avoid the conflict spreading to other Middle-East, oil-rich nations. Modest signs of de-escalation of geopolitical tensions in the Middle East have brought oil back to an almost two-week low.

Meanwhile, additional support measures in China have helped limit the fall in oil prices. Chinese authorities announced a 1 trillion yuan bond to support infrastructure.

Looking ahead, EIA data is due to be released and comes after API data showed an unexpected draw of 2.7 million barrels last week, defying expectations of a 200K barrel rise. Gasoline inventories also dropped by 4.2 million barrels.

WTI crude trades +0.2% at $83.83

Brent trades +0.16% at $87.70

Looking ahead

15:00 BoC rate decision

15:00 US new home sales

15:30 EIA crude oil inventories





Related tags: US Open SPX 500 USD Oil

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