SP500 Forecast: SPX rises with tech stocks leading the way

US futures

Dow futures +0.41% at 37617

S&P futures +0.37% at 4798

Nasdaq futures +0.55% at 17083

In Europe

FTSE +0.17% at 7471

Dax -0.03% at 16548

Chip stocks & tech mega caps rise further
Michigan consumer confidence data due
Oil is set for a weekly rise

Chip stocks & tech mega caps rise further

US stocks are pointing to a higher open, extending yesterday's rally with chip stocks and tech mega caps in focus.

Semiconductor stocks point to a stronger opening after Super Micro Computer lifted its Q2 profit forecast. This news comes after the NASDAQ 100 rose to a record high in yesterday's trade, boosted by tech mega-caps, chip stocks, and AI optimism.

Optimism surrounding this sector is so strong that these tech companies are still pushing higher even with the slowing global economy and worries about high interest rates for longer.

The Nasdaq is on track for weekly gains. The S&P 500 is also approaching record-high levels despite choppy trade at the start of the week after mixed earnings from banks and hawkish comments from central bankers.

Looking ahead, attention will be on January's Michigan consumer sentiment index, which is due to tick higher. This comes after a week of solid data from the US supporting Federal Reserve commentary, playing down the need for an early rate cut.

According to the CME MarketWatch, the bank is the market is pricing in a 54% probability of a rate cut in March, down from 75% just a week ago, suggesting that the markets have toned down expectations for rate cuts and bought them more in line with central bank commentary.

Corporate news

Macy’s is set to open lower after the top department store chain said it will reduce headcount and close five stores in a bid to cut costs.

Ford is pointing to a lower open after the automobile giant said it plans to reduce production of its F-150 lightning pickup truck.

iRobot is set to fall 35% on the open after reports in the Wall Street Journal that EU antitrust regulators will likely block Amazon's planned acquisition of the tech firm.

S&P 500 forecast – technical analysis

Despite a brief rise above 4800, this level is still the line in the sand that the price needs to rise above to test 4820 and look to fresh all-time highs. However, the bearish RSI divergence could see sellers take hold. On the downside, support is seen at the 20 SMA, 4750 and 4700 round number.

FX markets – USD falls GBP/USD falls

The USD is edging lower but is still on track for a second straight weekly gain boosted by solid U.S. economic data, which supports recent Fed commentary pushing back on early interest rate cuts.

EUR/USD is rising despite German PPI being weaker than expected, falling 1.2% MOM after declining -0.5% in November. The data points to a weak demand environment and bodes well for a continued cooling of CPI. Still, the ECB has pushed back against rate early rate cut expectations and speeches this week.

GBP/USD is falling after UK retail sales slumped by the most since the pandemic lockdowns. Retail sales tumbled 3.2% after 1.4% gains In November. Weak data raises concerns over A recession in the UK. Meanwhile, the Bank of England still says it's too early to discuss cutting interest rates as inflation rises to 4%.

Oil is set for a weekly rise.

Oil prices are holding steady on Friday but are set to book gains across the week as worries about ongoing tensions in the Middle East and oil output disruptions due to bad weather in the US overshadow concerns over the health of the Chinese economy and worries about high-interest rates for longer.

WTI is expected to rise around 1.6% across the week, while Brent is on track to gain under 1%

The market remains sensitive to developments in the Middle East, although tensions have not shut down oil production so far. Meanwhile, outages continue in Libya, and North Dakota, a top US oil-producing state, keeps prices supported.

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