S&P500 Forecast: Futures edge higher ahead of Alphabet & Microsoft earnings

US futures

Dow futures +0.01% at 35415

S&P futures +0.03% at 4553

Nasdaq futures +0.25% at 15491

In Europe

FTSE +0.06% at 7689

Dax 0.4% at 16197

• Fed kicks off its 2-day FOMC meeting
• US consumer confidence data due
• Microsoft & Alphabet to report after the close
• Oil hovers around a 3-month high ahead of API data 

FOMC meeting begins ahead of tomorrow's announcement

US stocks are set to open modestly higher extended gains from the previous session as the Fed's two-day monetary policy meeting kicks off and earning season ramps up.

Federal Reserve policymakers start their closely watched two-day meeting today as the markets have priced in a 25-basis point rate hike to be announced tomorrow. This would take the interest rate to a range of 5.25 two 5.5%.

Markets will be particularly watching out for any signals that the Fed could be planning to conclude its policy-tightening campaign. The meeting comes as inflation has cooled, although there is still uncertainty over how price growth will evolve over the coming months.

Prior to tomorrow's announcement, investors will be watching U.S. consumer confidence data which is expected to tick higher to 111.8 in July from 109.9 in June. Higher consumer confidence is often associated with increased willingness to spend. Improving consumer confidence could help feel bets that the US economy will avoid a recession.

Meanwhile, adding season continues to ramp up, several stronger-than-expected second-quarter results have helped to fuel but that the economy is heading towards a soft landing despite elevated interest rates.

Looking ahead, Alphabet and Microsoft are due to report after the clothes kicking off two weeks of results from big tech firms. Results are expected to focus on their cloud computing business which have proved to be cash cows for both companies. Attention will also be on the AI race, which has helped drive a strong rally in tech stocks this year.

Corporate news

General Motors rises after quarterly earnings after the auto giant raised its full-year profit guidance. GM plans to cut costs by a further $1 billion by the end of 2024.

General Electric rises after raising its full-year adjusted profit forecast, betting on steady demand for aircraft engine spare parts and services as it looks to benefit from soaring air travel.

Microsoft will be under the spotlight as it reports after the close. The tech giant is trading around its all-time high and is expected to post a 14% rise in earnings and a 6% rise in revenue.

Alphabet is set to report after the close and is expected to post EPS of $1.34 on revenue of $72.76 billion.

S&P 500 forecast – technical analysis

The S&P500 continues to trade within the multi-month rising channel, guided higher by the 20 sma. The RSI is teetering on the verge of overbought territory so buyers should be cautious. Immediate resistance can be seen at 4565 the 2023 high, ahead of 4600 round number and 4610 the upper band of the rising channel. On the downside, support can be seen at 4530 the weekly low, with a break below here opening the door to 4500 round number and 4450 the June high.

FX markets – USD rises, EUR falls

The USD is rising for a seventh straight session despite PMI data yesterday which showed growth in the service sector slowing. Attention is firmly on the FOMC rate decision as the two day meeting kicks off.

EURUSD is falling after German IFO business climate deteriorated further, falling to 87.3in July, below the 88 forecast and down from 88.4. This marker the third consecutive month of falling sentiment and signaled a prolonged recession in the eurozone’s largest economy.

GBPUSD is rising amid signs of improvement in the manufacturing sector after data from the Confederation of British Industry saw new orders decline at the weakest rate this year of -9 up from -15 in June. The data comes after the manufacturing PMI yesterday showed the sector contracted again in July but input costs as easing.

EUR/USD -0.24% at 1.1095

GBP/USD +0.05% at 1.2850

Oil rises ahead of API data

Oil prices are holding steady after rising to a 3-month high amid tighter supply and after a pledge by authorities in Beijing to support the world's second-largest economy.

Oil is on track to book its fifth straight weekly rise amid tight supply due to cuts by OPEC amid cuts by Saudi Arabia and Russia.

Meanwhile, China, the world's largest importer of oil, pledged to ramp up economic policy support for the economy, which has shown signs of slowing in recent months.

These factors overshadowed data showing that business activity in the US slowed to a five-month low in July. However, pulling input prices and slower hiring prices could mean that the Federal Reserve is making progress as it attempts to rein in inflation.

Looking ahead, API inventory data is in focus and is expected to show a 2-million-barrel draw.

WTI crude trades +0.1% at $78.65

Brent trades  +0.15% at $82.69

Looking ahead

15:00 US consumer confidence

21:30 API oil inventories