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S&P 500 Forecast: SPX flat as banks kick off earnings season

Article By: ,  Senior Market Analyst
Friday 2:32 PM

US futures

Dow future 0.05% at 42013

S&P futures -0.01% at 5780

Nasdaq futures -0.30% at 20182

In Europe

FTSE -0.04% at 8231

Dax 0.27% at 19259

  • Stocks flat but set for a weekly gain
  • Banks kick off earnings season on the front foot
  • Tesla falls after revealing cyber taxi
  • Oil rises across the week

Stocks are steady but set for a weekly gain

U.S. stocks are heading for a mixed open as banks kick off the latest earning season and after PPI, which comes hot on the heels of stronger-than-expected CPI figures yesterday.

US PPI showed that wholesale inflation rose 1.8% year over year, down from 1.9% in August. On a monthly basis, PPI was 0%.

The data came following yesterday's closely watched CPI inflation report, which showed that inflation was higher than expected in September, but higher jobless claims pointed to possible weakness in the jobs market.

According to CME's Fed Watch, the market is still expecting a 25 basis point rate cut from the Federal Reserve in November and has lifted expectations of no rate cut to around 16%. Federal Reserve president Raphael Bostic said he was open to leaving rates on hold in November.

All three major indices are on track to book the fifth straight weekly gain, the best winning streak for the Dow in eight months and the NASDAQ since May. Meanwhile, the S&P is up 21% this year, resulting in lofty valuations that will be tested as earning season begins.

Corporate news

Tesla is set to open 6% lower after the EV maker unveiled its long-awaited cybercab, a self-driving robo taxi with no steering wheels or pedals. The vehicle should be ready for production by 2026, although that could easily slip to 2027. While Elon Musk highlighted safety features that add life cell benefits, time frames remain questionable.

JP Morgan is set to open 1% higher after the largest US lender by assets beat quarterly estimates for both profit and revenue thanks to higher-than-expected net interest income.

Wells Fargo is also set to open 2% higher after the bank reported Q3 earnings ahead of forecasts boosted by lower expenses and credit costs.

Black Rock is set to open 1% higher after the world’s largest asset manager posted assets under management at record highs for the third straight quarter, helped by surging inflows into the company's ETFs amid a strong equity rally.

S&P500 forecast – technical analysis.

The S&P500 is hovering around its record high at 5797; a rise above here brings 6000 into focus. On the downside, minor support is seen at 5770. Below here, the October low of 5670 comes into play. A break below here creates a lower low.

FX markets – USD falls, EUR/USD rises

USD is falling but is still set to rise across the week as the market expects gradual rate cuts from the Federal Reserve.

EUR/USD is rising modestly but is on track to fall across the week on ECBB rate cut expectations. Investors look ahead to next week's ECB interest rate decision, in which the central bank is expected to cut rates by 25 basis points. Earlier today, data confirmed that German inflation cooled to 1.6%YoY, which is in line with the preliminary reading and well below the 2% target.

GBP/USD is edging higher after UK GDP data showed the economy rebounded in August after two months of stagnation. The data will be well received by Labour ahead of the Budget later this month. Still GBP/USD is on track to fall 0.3% across the week, the second straight week of losses.

Oil rises for a second straight week

Oil prices are heading lower on Friday after surging 3.5% in the previous session. Oil is on track to book a second straight weekly gain as investors weigh the impact of Hurricane Milton in the US against concerns of supply disruption in the Middle East.

The market is worried about a potential Israeli attack on Iranian oil infrastructure, adding an elevated risk premium to oil prices.

Meanwhile, hurricane Milton's destruction could dampen fuel consumption in some areas of the US, the world’s largest oil consumer.

Looking ahead, attention will be on China this weekend as the finance minister is expected to announce a further $283 billion in economic stimulus, which could help boost economic growth and demand in the world's largest oil importer.

 

 

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