S&P 500 Forecast: SPX falls ahead of US inflation data, Fed speakers

US futures

Dow futures -0.15% at 39414

S&P futures -0.27% at 5217

Nasdaq futures -0.5% at 18236

In Europe

FTSE -0.5% at 7894

Dax -0.08% at 18201

• Stocks drift lower ahead of a speech by Raphael Bostic
• US core PCE data is on Friday
• Apple in talks with Baidu over AI
• Oil rises as geopolitical tensions remain in focus

Fed speakers & core PCE data on Friday

US stocks are drifting low Monday after last week's rally, which saw record highs reached on Wall Street. Investors are waiting cautiously for Federal Reserve speakers across the week and inflation data on Friday.

U.S. stock indices rallied to record highs last week and are on track for a fifth straight month of gains after the Federal Reserve maintained guidance for 75 basis points worth of cuts this year. Ongoing AI hype also helped investor demand for heavyweight tech stocks.

From here, we could see some consolidation after booking strong gains across the quarter. There could also be some quarter-end repositioning this week, which could result in some softness on Wall Street.

However, this week's primary focus will be on US core PC data, the Fed's preferred gauge for inflation, which is due out on Friday—also the Good Friday holiday.

However, inflation data has fallen considerably toward the Fed's 2% target, and investors will want to see this trend continue.

In addition to Friday's inflation data, a flurry of Fed officials are due to speak, including Raphael Bostic and Mary Daly, who will speak today and on Friday, respectively.

Their comments will be watched closely for clues over the Fed's next move with the CME fed watch tool pricing in a 75% probability of the Federal Reserve starting to cut rates in June, up from 55% at the start of last week.

Corporate news

Apple is under the spotlight amid reports in China that the tech giant is in talks with Baidu to use the Chinese internet giant’s AI models in iPhone software. This integration could help boost China’s iPhone sales, which have fallen for the past four straight quarters. Even so, Apple is still struggling after the Department of Justice announced that it will be sued for operating monopolies and abusing power.

Intel and AMD fell 3.5% after the FT reported that China would limit the use of their chips in government computers and servers, potentially impacting sales.

Tesla has fallen over 1% after Mizuho downgraded it from buy to hold amid strong competition and slow demand in its Chinese market.

S&P 500 forecast – technical analysis.

The S&P 500 trades in a rising channel, guided higher by the 20 SMA. The price is consolidating below last week’s record high of 5260. Buyers will need to rise above this level to push gains towards 5300. Immediate support can be seen at 5200, the round number ahead of 5100, which is last week’s low.

FX markets – USD rises, GBP/USD falls

The U.S. is inching lower at the start of the new week after gaining 1% last week in the second straight week of gains. The US dollar holds near a monthly high amid ongoing signs of resilience in the US economy despite the market pricing 75 basis points of rate cuts this year.

EUR/USD is rising but continues to hover around its lowest levels in three weeks, on USD strength and expectations that the ECB will cut interest rates in June. ECB president Christine Lagarde is due to speak later today, and investors will be watching closely for further signals that the central bank could be starting an easing cycle. ECB’s Philip Lane said that at some point, the fall in inflation will allow rate cuts.

GBP/USD is hovering around a monthly low on BoE rate cut bets. After last week’s BoE meeting, investors have increased expectations that the BoE will start to cut rates in June. Weaker-than-expected retail sales on Friday added to the downbeat mood towards GBP. This week is a relatively quiet week for the pounding comparison. Attention will be on Bank of England policymaker Catherine Mann, who is due to speak.

Oil rises as geopolitical tensions remain in focus

Oil prices are rising on Monday as the likelihood of a Gaza ceasefire dims, adding to concerns over tightening global supply.

The United Nations Security Council will vote later today on an alternative resolution for an immediate ceasefire in Gaza as well as the release of hostages by Hamas; however, an agreement within the UN Security Council is looking uncertain.

Meanwhile, Russia has ramped up attacks on Ukraine's energy infrastructure after Ukraine attached Russia's energy facilities in previous weeks, adding to global supply worries.

The prospect of tighter supplies lifted oil prices to a four-month high earlier this month.

However, the upside could be limited if the US dollar continues to strengthen, making buying oil more expensive for those buying with other currencies.