S&P500 Forecast: SPX slips ahead of FOMC minutes, Nvidia earnings

US futures

Dow future -0.18% at 39,800

S&P futures -0.13% at 5307

Nasdaq futures -0.0% at 18630

In Europe

FTSE -0.75% at 8357

Dax -0.25% at 18675

• US stocks fall as Fed speakers dampen rate cut expectations
• FOMC minutes are due after the close
• Nvidia reports Q1 earnings after the close
• Oil falls for a third day on worries over the demand outlook

FOMC minutes in focus after cautious Fed commentary 

US stocks are pointing to a lower open as concerns over high rates for longer overshadow optimism surrounding Nivida’s Q1 earnings after the closing bell.

Fed speakers continue to warn that interest rates need to remain high for longer, dampening optimism of an earlier rate cut following last week's inflation data.

Fed governor Christopher Waller said he wants to see several more good inflation prints before cutting interest rates. Cleveland Fed president Loretta Mester echoed his views. Meanwhile, Atlanta Federal Reserve president Raphael Bostic said he doesn't see rates being cut before the final quarter of the year.

These views are nothing new, with Fed speakers consistently giving the same message as inflation, at 3.4%, is still well above the Fed’s 2% target level. Attention now turns to the minutes from the FOMC meeting this month. The minutes could provide more clues about when the Federal Reserve could start to loosen monetary policy.

In addition to the FOMC minutes, Nvidia results are also in focus and could impact sentiment across the broader market.

Corporate news

Nvidia is in focus ahead of its Q1 earnings, which are expected to be impressive. Wall Street is expecting a 242% increase in revenue to $20.65 billion and for EPS to rise to $5.17, which is up from $0.82. Guidance will also be key, with Q2 sales expected to increase by 97%. The results come as new Nvidia trades up 100% this year and up to 200% over the past 12 months, outperforming the S&P 500. The bar is high, with upbeat numbers and strong guidance to help US embassies with the next leg higher.

Target is set to open over 8% lower after the retailer posted disappointing results. Earnings missed estimates, and sales fell as consumers bought fewer groceries and home goods. EPS was $2.03 below the $2.06 expected, and revenue came in at $24.53 billion, down 3% from the same period a year earlier.

Lululemon is set to open over 3% lower after the athletic apparel retailer announced the departure of its chief product officer.

S&P 500 forecast – technical analysis.

The S&P 500 is hovering around all time highs of 5325. The RSI supports further upside while it remains out of the overbought territory. Above 5325, 5350 becomes the next logical target ahead of 5400. Support can be seen at 5277, the previous all-time high, ahead of 5200.

FX markets – USD rises, GBP/USD rises

The USD is rising modestly for the third straight day after hawkish Federal Reserve commentary supported the view that the Fed will keep interest rates high for longer.

EUR/USD is under pressure amid a quiet economic calendar for the eurozone and after ECB president Christine Lagarde signaled to a June rate cut, saying that inflation in the region was under control. The ECB is expected to cut rates in June by 25 basis points and again in September and December.

GBP/USD is rising after UK inflation came in hotter than expected at 2.3% YoY in April, down from 3.2% in March. While this was the lowest level since summer 2021, it was ahead of the forecasts of 2.1%. Core inflation and service sector inflation were also stickier than expected, resulting in the market pushing back rate cut expectations from June to August.

Oil falls for a third day on demand concerns.

Oil prices are falling for a third straight day amid concerns over the oil demand outlook and after US. Inventories saw sizable gains.

According to the American Petroleum Institute, crude oil stockpiles in the US rose by 2.48 million barrels for the week ending May 10, and gasoline inventories also rose by 2.08 million barrels, more than countering last week's 1.26 million barrel decline.

The data raises concerns over demand in the US and comes at a time when the market is also fretting over the prospect of high interest rates for longer, which could further depress demand.

EIA stockpiles are due shortly.