S&P500 Forecast: SPX hits a record high post election & pre-Fed rate decision

US futures

Dow future 0.08% at 43789

S&P futures 0.3% at 5947

Nasdaq futures 0.52% at 20889

In Europe

FTSE 0.24% at 8170

Dax 1.67% at 19359

• Stocks extended yesterday’s gain on Trump trade gains
• Fed is expected to cut rates by 25 bps
• GBP/USD rises on USD weakness & as BoE cuts rates
• Oil falls for a second day

Trump trade & Fed rate cut

U.S. stocks are set to open higher, extending gains to record levels as the market continues to weigh up Trump's victory and ahead of the Federal Reserve interest rate decision later today.

Stocks are building on a sharp rally that was sparked yesterday by Donald Trump winning the US presidential election for a second time. Investors expect Trump to lower corporation tax and de-regulate which helped US  major industries reach record highs on Wednesday.

Attention is now turning to the Federal Reserve interest rate decision, where the central bank is expected to cut rates by 25 basis points. However, the market will be watching the central bank's guidance for clues on the future path of easing.

The market is pricing in around a 70% probability that the Fed will cut by 25 basis points again in December. However, the Fed may look to change its course ahead of a Trump Presidency and expected expansionary policies.

Traders have trimmed their expectations for rate cuts in 2025 to just two amid consistently solid economic data and considering possibly higher inflation from Trump's policies.

Corporate news

WarnerBros Discovery is rising after the media giant posted a surprise Q3 profit. Revenue missed estimates as the studio business suffered from fewer blockbuster releases.

Under Armour is set to open 12% higher after the sportswear retailer raised its annual profit forecast as the turnaround strategy picks up pace and on efforts to sell more clothing at full price.

Qualcomm shares have jumped 7% after the chipmaker forecasted current-quarter sales and profits above expectations Meanwhile, chip maker ARM fell 6% after its quarterly forecasts disappointed the market.

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S&P500 forecast – technical analysis.

The S&P 500 rose above 5880 yesterday to fresh record highs of 5950. With blue skies above, buyers could look towards 6000 as the next logical target. Support is at 5880  at the 50 SMA at 5700.

FX markets – USD rises, EUR/USD slumps

The USD is falling, giving back some of yesterday’s gains as the market continues to weigh up what Trump’s policies could mean for inflation and the Fed. Attention is on the FOMC meeting today, where the Fed is expected to cut rates.

EUR/USD traded 0.5% higher, recovering from steep losses yesterday, and after mixed data for the region, eurozone retail sales rose by more than expected, up 0.5%, marking the third straight monthly increase. Meanwhile, German industrial production was weaker than expected, falling -2.5%, highlighting ongoing weakness in the sector.

GBP/USD is rising after the Bank of England cut interest rates as expected by 25 basis points, but it is worried about higher inflation following last week’s Budget. The central bank warned that inflation could rise by 0.5% after Labour unveiled tax hikes and large-scale borrowing and spending.

Oil falls for a second day after Trump’s win.

Oil prices are falling for a second straight day as the market continues to weigh up what a Trump presidency might mean. A stronger U.S. dollar and lower crude imports in China overshadowed any supply risks.

While oil initially sold off on news of Donald Trump's victory, it later pared some of those losses to settle less than 1% lower on Wednesday, while the US dollar rose to a four-month high. A stronger dollar makes buying oil more expensive for holders of foreign currencies.

A Trump Presidency has brought about a stronger dollar but the outlook for oil supply and demands is less clear. Trump could increase sanctions on Iran and Venezuela, which would reduce supply. His policies are also pro-business which could lift growth and the demand outlook. However, should Trump start a trade war with China, the demand outlook could deteriorate.

Today, downside pressure can come from data showing that crude imports in China fell 9% in October, marking the sixth straight monthly fall. A rise in US crude oil inventories added pressure to oil prices.