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S&P 500 Forecast: SPX rises after Netflix beats forecasts

Article By: ,  Senior Market Analyst
October 18, 2024 2:42 PM

US futures

Dow future -0.08% at 43204

S&P futures 0.30% at 5858

Nasdaq futures 0.60% at 20315

In Europe

FTSE -0.29% at 8366

Dax 0.35% at 19647

  • Stocks rise & are set for a 6th weekly rise
  • Netflix rises 6% after beating earnings and subscriber numbers
  • Oil is on track to fall by 6%

Stocks inch higher and book weekly gains

U.S. stocks point to a modestly higher start on Friday, boosted by broad gains in technology stocks, while Netflix jumped following strong quarterly results.

While gains are modest today, all three major indices are set to log a sixth straight weekly rise. The Dow Jones and the S&P 500 also booked fresh record highs this week amid upbeat earnings from corporate America and broadly positive economic data.

Yesterday, retail sales came in stronger than expected, and jobless claims fell, pointing to the ongoing Goldilocks scenario, whereby the US economy remains resilient, but inflation continues to ease. This position allows the Federal Reserve to continue cutting interest rates gradually, which could support stocks higher.

The US economic calendar is relatively quiet, with just housing starts. Attention will be on Federal Reserve speakers with Christopher Waller, Neel Kashkari, and Raphael Bostic scheduled.

The Federal Reserve is expected to cut interest rates by 25 basis points in November and potentially again in December.

Amid a quiet economic calendar, attention will be on US earnings season.

Corporate news

Netflix is set to open over 6% higher after the streaming giant posted better-than-expected quarterly income and added 5.07 million subscribers in Q3. Netflix posted a 15% rise in revenue to $9.8 billion, slightly ahead of forecasts, and EPS of $5.40 was ahead of the $5.13 forecast. The results come as the business looks to focus on profitability, shifting away from subscriber numbers.

Apple is set to open 1.7% higher after sales of the latest iPhones in China have reportedly jumped 20% in the first three weeks compared to last year's model.

American Express is set to open lower after the credit card giant posted Q3 profit and revenue below expectations and bigger provisions for credit losses.

S&P500 forecast – technical analysis.

The S&P 500 continues to trade above its rising trendline dating back to November 2023. After a period of consolidation at the start of October, the price has expanded higher to a record high this week of 5882. Buyers could look to extend gains above the record high of 5882 towards 5900. Minor support can be seen at 5800, the weekly low. A break below 5700 open creates a lower low.

FX markets – USD falls, GBP/USD rises

USD is falling as bulls pause for breath at a 2.5-month high against its major peers. The USD is set to rise 0.7% across the week, its third straight weekly rise. The USD rises on easing USD rate cut expectations and the Trump trade bets, which is expected to be inflationary.

EUR/USD is rising, recovering some of yesterday's losses, but it's still on track to fall 0.85% across the week after the ECB cut interest rates by 25 basis points yesterday. It is expected to continue cutting basis points heading toward 2025.

GBP/USD is rising after UK retail sales rose by more than expected, beating forecasts for a third straight month. Retail sales rose 0.3%, well above the -0.3% contraction economists forecast. The data comes as inflation in the UK fell below the BoE’s 2% target and amid rising expectations that the BoE will cut rates in November.

Oil is set to fall 6% this week.

Oil prices edged lower on Friday and are on track to lose 6% across the week, marking the largest weekly decline in over a month.

This week's steep selloff came amid concerns over demand from China's slowing economy and as the risk premium eased from the Middle East conflict.

Data today showed that the Chinese economy grew at its slowest pace in 18 months. China's refinery output declined for a sixth month as weak fuel consumption and thin refining margins limited processing.

Meanwhile, figures from the Energy Information Administration showed that US crude oil, gasoline, and distillate inventories fell last week, offering support to oil prices and limiting losses,

 

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