S&P500 Forecast: SPX rises with chip stocks leading the way

US futures

Dow future 0.61% at 42930

S&P futures 0.87% at 5987

Nasdaq futures 1.09% at 21538

In Europe

FTSE 0.1% at 8240

Dax 1.2% at 20145

US stocks extend Friday’s gains
AI optimism drives tech stocks higher
US economic calendar ramps up this week
Oil rises for a 6th straight day

Stocks rise ahead of a busy week

U.S. stocks are pointing to a higher start extending Friday's rally as investors buy into technology stocks on continued optimism surrounding AI and as market participants await key economic data that could set the tone for the Fed’s monetary policy.

Stocks rebounded on Friday after a sharp selloff in late December amid concerns over high valuations and rising treasury yields. However, those concerns appear to be easing as liquidity returns to the market.

This week is packed with economic data and speeches from Federal Reserve officials as investors wait for further clues about the health of the US labour market and the pace of Fed rate cuts this year.

The main focus will be Friday's monthly payroll data, which is expected to show that US job growth slowed in December compared to the previous month.

The mood is also upbeat on reports that the Trump administration is considering more targeted, less aggressive trade tariffs. Trump is expected to take the oath of office on January 20th and implement business-friendly measures, including cutting corporate taxes and easing regulation. However, such measures run the risk of reviving inflation.

Corporate news

Microsoft is set to open 1% higher after the software giant announced plans to invest $80 billion in 2025 in developing data centers to train AI models. The AI optimism is helping other chipmakers rise, with new video up 2% premarket, while AMD Micron technology and Broadcom also pushed higher.

Left will open over 4% higher after receiving a breaker upgrade to buy from hold, as the recent 10% drop over the past month has created value.

S&P 500 forecast – technical analysis.

The S&P 500 has eased from its ATH of 6100 and is in a consolidation phase. More recently, the price has recovered from the 5825 low reached last week, rising above the 50 SMA as it heads towards the 6000-6050 resistance zone. A rise above here could help the price break out of range and head towards 6100 ATH. Support is seen at 5825, with a break below here creating a lower low. Below here 5700 comes into play.

FX markets – USD falls, EUR/USD jumps

The USD is falling around 1% against its major peers, retreating from a two-year high on reports of more targeted trade tariffs from Trump. The US dollar surged 8% last year, its largest annual gain in almost a decade. U.S. data this week could provide further clues about the health of the US economy and the direction of the Fed.

EUR/USD has surged 1% higher on reports that Trump's tariffs will be less aggressive than initially feared. Reports are circulating that Trump's aides are exploring the idea of applying tariffs on only two critical imports in specific sectors. The Euro is also finding support from an upward revision to PMI data, with the services PMI rising to 51.6, with persistent inflation pressures seen.

GBP/USD is extending its recovery from the multi-month low set in the previous week as it rises above 125. The improving risk mood and easing concerns over Trump's tariffs have pulled the U.S. dollar lower. The pound is rising despite a downward revision to UK services and composite PMI figures for December, and CBI data shows that UK business confidence is at a 2-year low post-budget.

Oil rises for a 6^th straight day

Oil prices are rising for a sixth straight session, reaching fresh three-month highs after booking gains of almost 5% last week. Solid demand amid colder weather and expectations of tighter sanctions on Iranian and Russian exports have boosted oil prices.

The Biden administration plans to impose further sanctions on Russia over its war with Ukraine. Meanwhile, Goldman Sachs expects Iranian oil production and exports to fall by Q2 due to additional sanctions from the incoming Trump administration.

Separately, weather in northwest Europe and the United States has been colder than usual in recent weeks, boosting demand with the energy complex.

News that Saudi Aramco, the world's largest oil exporter, has raised crude oil prices for February for buyers in Asia for the first time in three months also supports the oil price.

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