S&P 500 Forecast: SPX rises with earnings in focus, Tesla jumps

US futures

Dow futures -0.16% at 38454

S&P futures 0.03% at 5073

Nasdaq futures 0.03% at 17559

In Europe

FTSE 0.34% at 8070

Dax -0.02% at 18138

Stocks rise, Tesla jumps 12%
US durable goods rise by more than expected
Meta reports after the close
Oil holds steady ahead of EIA stockpile data

Stocks rise further as more earnings roll in

US stocks point modestly high as corporate earnings continue to roll in from some of the world's largest firms, although stronger-than-expected durable goods orders could limit the upside.

The three leading indices closed higher yesterday, boosted by strong gains in tech and chip stocks as the tech rebound continued.

More broadly, equities were supported by weaker-than-expected business activity data in April, which lifted hopes that the US economy could be starting to slow. This could relieve some upward pressure on inflation and encourage the Federal Reserve to cut rates sooner.

Today, US durable goods orders were stronger than forecast, casting some doubt on yesterday’s narrative and pulling futures off their highs. Still, corporate earning optimism is keeping the S&P 500 above the flatline for now.

Corporate news

Tesla is set to open 12% higher despite missing on both top and bottom line in Q1 earnings. The EV maker saw revenue drop to $21.3 billion from $23.33 billion a year earlier, missing forecast by almost $1 billion. EPS also took a significant hit, dropping 55% to $0.34 per share compared to $0.73 per share in the same period last year. Despite posting its largest quarterly revenue decline since 2012, investors focused on news of an acceleration of more affordable EV models, AI, and autonomy.

Sticking with earnings, Meta will also be in focus. The social media giant is expected to post EPS of $4.29, up from $2.22 in Q 1 2023, on revenue of $36.1 billion, up 26% year on year. Attention will be on ad revenue, as over 96% of Meta revenue revolves around ad spend. A forecast from Interpublic Group's Magna unit suggested ad spending could continue to accelerate in 2024.

AT&T is set to rise by 3% after the telecom giant posted stronger subscriber growth than expected and beat Q1 free cash flow growth estimates.

Visa is set to open over 2% higher after the credit card giant's Q2 results beat expectations as consumers continued spending despite economic headwinds.

Hasbro is also set to rise 4.9% after the toymaker beat profit estimates as leaner inventories and digital gaming revenue helped offset softer demand for toys.

S&P 500 forecast – technical analysis.

The S&P500 has extended its rebound above 5050 the March low, but appears to be struggling to push gains further. The longer upper wick on today’s candle suggests little buying demand at the higher prices. Sellers could look to retest 5050, with a break below here opening the door to 5000. On the upside, should buyers gain traction a rise above 5100 could open the door to 5150.

FX markets – USD rises, GBP/USD falls

The USD is rising, boosted by stronger durable goods orders after yesterday’s weaker PMI data. US GDP and core PCE figures will be in focus.

EUR/USD is falling despite stronger-than-expected German business sentiment. The IFO business climate index rose for a third straight month in April, supporting the view that the eurozone's largest economy has started to recover from its economic downturn. The data comes after the German services PMI jumped higher in April as well. However, signs of recovery in the eurozone are not likely to knock the ECB off track from cutting rates in June.

GBP/USD is inching lower, giving back some of yesterday's gains. The pound is struggling on expectations that the Bank of England could start cutting interest rates as soon as July or August. The market has shrugged off comments by policymaker Hugh Pill, who considered that rate cuts were still some way off. The Bank of England's next meeting is in two weeks and could be pivotal for signalling whether or not the central bank will be cutting rates early in the summer.

Oil holds steady ahead of EIA stockpile data.

Oil prices continue to hold steady around $83 a barrel, where they have hovered for most of the week after high volatility last week.

Prices are weighing up mixed US economic data and a surprise fall in US crude oil stockpiles while keeping an eye on the Middle East.

The de-escalation of tensions between Iran and Israel pulled oil prices sharply lower last week and could potentially spur further falls as the risk premium continues to come off.

Meanwhile, US crude oil inventories fell by 3.23 million barrels in the week ending April 19th, defying expectations of a rise by 800,000 barrels. Attention will be on here oil inventory data due shortly.

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