S&P 500 forecast: SPX looks to data for policy clues as blackout period kicks in

US futures

Dow futures -0.32% at 36107

S&P futures -0.49% at 4569

Nasdaq futures -0.68% at 15889

In Europe

FTSE -0.45% at 7102

Dax +0.14% at 16408

• S&P 500 falls after its highest close of the year on Friday
• Data in focus with NFP on Friday and no Fed speakers
• Uber gains on S&P 500 inclusion
• Oil extends losses after OPEC+’s cuts 

Data in focus with NFP on Friday and no Fed speakers

U.S. Stocks are pointing to a lower start on Monday amid a cautious start to the week and after strong gains across the month of November, boosted by expectations that the Federal Reserve has finished hiking interest rates.

The S&P 500 closed its highest level this year on Friday, with year-to-date gains of almost 20%. Meanwhile, the Nasdaq 100 has surged 37% across 2023.

The market shrugged off comments by Federal Reserve chair Jerome Powell on Friday as he pushed back on rate-cut bets. However, he did say that interest rates were sufficiently restrictive, suggesting that peak rates have been reached, fueling expectations that the next move by the Fed will be a rate cut.

There will be no further updates from Federal Reserve officials this week as the central bank enters its blackout period ahead of the meeting on the 12th and 13th of this month.

Data today will come from factory orders which are expected to fall to 2.5% MoM in October, down from after rising 2.8% in September.

However, the main focus will be on Friday's non-farm payroll, which is expected to show that the US economy added 180,000 jobs in November after 150,000 jobs were added in October. Weaker jobs data could fuel the central bank cut narrative, lifting stocks further.

Corporate news

Cryptocurrency exchange Coinbase will be in focus and is set to open sharply higher after Bitcoin rose above $40,000 for the first time this year, to a 19-month high of just below $42,000.

Spotify is set to rise after announcing that is planning to lay off 17% of its workforce in a move to reduce costs.

Uber is set to open over 4% higher with the right-hailing service set to join the S&P 500 index as of December 18^th.

Virgin Galactic is falling over 14% after British billionaire Richard Branson ruled out additional investment for the space travel company.

S&P 500 forecast – technical analysis

The S&P 500 is pausing from breath after its recent grind higher hit resistance just shy of 4600 the July high. A rise above 4600 is needed to extend gains towards 4640 the March 2022 high. Meanwhile, support can be seen at 4535, last week’s low, with a break below here opening the door to 4500 the September high.

FX markets – USD rises, EUR/USD falls

The USD is edging higher on Monday, regaining some lost ground after falling for three straight weeks on expectations that the Federal Reserve will soon start cutting interest rates. This week the main focus for the dollar will be Friday’s nonfarm payroll results, which could provide further insight into the health of the US labour market.

EUR/USD is falling towards 1.0850 on bets the ECB could be the first major central bank to raise interest rates next year. The market is fully pricing in an April rate cut. Eurozone investor sentiment improved slightly to  -16.8 from -18.6 but missing forecasts of -14.4. This was the 22nd straight reading of negative investor confidence, as the index hasn't been above the zero mark since February 2022.

GBP/USD is falling after booking gains in the previous week, boosted by hawkish commentary from Bank of England officials, including Governor Andrew Bailey. This week, the UK economic calendar is limited, so the focus could remain on central bank expectations. The BoE is widely expected to keep interest rates on hold at the December meeting. Andrew Bailey has pushed back against rate cut bets saying he will do whatever it takes to get inflation to the central bank’s 2% target.

EUR/USD -0.1% at 1.0865

GBP/USD -0.4% at 1.2660

Oil extends losses after OPEC+’s cuts

Oil prices are falling toward the November lows amid ongoing skepticism over the latest OPEC+ supply cuts and amid uncertainty surrounding the global demand outlook.

Oil prices fell over 2% last week after OPEC+ announced supply cuts, that were voluntary, raising doubts over whether producers would actually implement them. The move has so far failed to convince the markets that supply would be tightened, which, combined with the markets anticipating an economic slowdown next year, is keeping oil prices depressed.

Data on Friday showed that global manufacturing activity was weak in November owing to soft demand. Eurozone and US factory activity contracted and China data painted a mixed picture.

An escalation of tensions in the Middle East could limit the downside in oil prices after US commercial vessels came under attack in the Red Sea.

WTI crude trades -0.8% at $73.50

Brent trades -0.8% at $7819