S&P500 Forecast: SPX hits fresh record highs as Netflix soars

US futures

Dow futures +0.44% at 38077

S&P futures +0.60% at 4894

Nasdaq futures 0.93% at 17563

In Europe

FTSE +0.21% at 7512

Dax +1.5% at 16883

S&P500 rises to a new record high
Netflix smashed subscriber additions
Tesla reports after the close
Oil holds steady despite China stimulus

Stocks hit fresh record highs

U.S. stocks point to further gains on the open, reaching fresh record highs as tech stocks extend the rally following upbeat numbers from Netflix and on optimism of a soft landing for the US economy.

Stocks have been powering higher on the signs of a strong U.S. economy and despite central bank officials pushing back against an early Fed rate cut.

Robust data last week, such as retail sales beating forecasts and consumer confidence rising to an 8-month high, have highlighted the resilience of the US economy and support the soft landing narrative.

Attention will be on US PMI data later today for further signs that the economy is holding up. The service sector is expected to expand, while the US manufacturing PMI is predicted to stay at 47.9 in January.

Meanwhile, earnings are in focus as the strong showing from tech earnings over the past few sessions has boosted the sector, supporting record highs in the US indices.

The record highs have come even as the market dials back rate-cut bets. According to the CME Fedwatch tool, the market no longer expects a rate cut in March.

Corporate news

Netflix is set to open just shy of 10% higher after impressive Q4 subscriber numbers. The streaming giant posted a 13.1 million increase in additional subscribers, taking total paid subscribers to 260 million. Meanwhile, revenue was ahead of forecasts at $8.8 billion, up 12.5% year on year, while EPS came in at $2.11, slightly below expectations of $2.22.

Tesla is rising ahead of the open on reports that the company aims to start producing a new mass-market EV in mid-2025. Tesla’s results for Q4 came out after the close, and while the EV maker posted record deliveries, these were achieved through steep price cuts, which are expected to hit margins.

AT&T fell 3.7% after the communications group unveiled full-year earnings guidance below forecasts as it struggles with tough competition.

S&P 500 forecast – technical analysis

The S&P 500 continues to rise within its ascending channel at fresh all-time highs. Buyers will be looking towards 4900 round number ahead of the key 5000 psychological level. Immediate support can be seen at 4800, the December high, with a break below here negating the near-term uptrend. A fall below 4710, last week’s low, could create a lower low.

FX markets – USD falls GBP/USD rises

The USD is falling today but has seen choppy trade over the last week as investors await the next catalyst which could be GDP or core PCE data due at the end of this week.

EUR/USD is rising, capitalizing on a weaker U.S. dollar after eurozone PMI data showed signs that the slowdown could be bottoming out, although there are still no signs of a recovery. The composite PMI rose to 47.9, up from 47.6, partly thanks to an improving manufacturing sector.

GBP/USD is rising after UK PMI data shows that the dominant service sector is stronger than forecast in January, rising to 53.8, up from 53.4. While service sector inflation remains sticky, the data adds to the case for the Bank of England to wait a little longer before cutting rates.

Oil holds steady

Oil prices are holding steady as the market weighs up the Chinese economic stimulus package and geopolitical tensions against concerns over demand.

China, the world's largest oil importer, announced that it would cut the amount of cash that banks must hold as a reserve from early February to shore up the economic recovery.

Elsewhere, US crude stockpiles fell by 6.67 million barrels, according to API inventory data. The EIA figures are due out later.

Meanwhile, geopolitical tensions in the Middle East continue to offer a floor to the price as rising shipping disruptions maintain the oil price risk premium. For the oil price to push higher, supply in the Middle Eastern region would need to be disrupted, or a broader escalation of attacks become apparent.

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