S&P500 Forecast: SPX falls as Alphabet disappoints & trade concerns weigh

US futures

Dow future -0.02% at 44550

S&P futures -0.24% at 6030

Nasdaq futures -0.69% at 21533

In Europe

FTSE 0.3% at 8601

Dax 0.08% at 21530

China-US trade worries linger
US ADP payrolls beat forecasts, services PMI up next
Alphabet disappoints and falls 7% pre-open
Oil falls as inventories rise & on trade concerns

Trade war concerns linger, Alphabet drops 7%

US stocks point to a weaker open on Wednesday as traders digest a slew of corporate earnings as well as ongoing trade tensions between the US and China.

US indices closed higher in the previous session, boosted in part by Trump's decision to delay tariffs on Mexico and Canada. The market became hopeful that Trump had some flexibility to negotiate his stance. However, it remains unclear how prepared Trump is to strike a deal with China's President Xi Jinping after applying 10% tariffs.

Trump’s comments suggest that he's in no rush to hold discussions, meaning that these trade tariffs and China’s retaliatory measures could be ongoing.

On the data front, US ADP private payrolls rose by more than expected in January a sign of the resilience in the US labour market.

Private payrolls rose 183K in January, ahead of the 150 K forecast, while the December total was also revised higher to 176 K. The data comes after JOLTS jobs openings yesterday were weaker than expected, pointing to a downward trend in the labour market. This could keep a lid on wage growth and support the view that the labour market is not fueling pressure on inflation.

The data comes ahead of Friday's nonfarm payroll report, which is expected to show that the US economy added 154k jobs in January, down from 256k the previous month. However, the unemployment rate is expected to hold steady at 4.1%. Signs of weakness in the jobs market could raise Fed rate cut expectations and lift stocks.

US earnings continue to roll in, painting a mixed picture.

Corporate news

Alphabet is falling 7% ahead of the open after revenue came in slightly below forecasts at $96.5 billion, below the $96.67 billion forecast. Earnings were ahead of expectations at $2.15 vs the $2.13 forecast. Cloud revenue growth was a concern as it slowed to 30% from 35% in the previous quarter. Furthermore, a huge capital expenditure of $75 billion was announced for 2025, well up from the $58 billion expected by analysts. This raised worries about overspending on AI, especially in light of DeepSeeek’s unveiling of a cheaper AI model last week. Will these large investments achieve the return investors are after?

AMD is falling over 9% after the computer hardware manufacturer's Q4 data, which showed revenue coming in below expectations.

Walt Disney is set to open 1.5% higher after the media and entertainment giant posted better-than-expected Q1 earnings, boosted in part by strong demand for Moana 2.

Uber is set to open over 5% lower after the ride-hailing and food delivery giant forecast current-quarter bookings below estimates and warned that a strong dollar could hurt the first three months of 2025

S&P 500 forecast – technical analysis.

The S&P 500 continues to hold above the 50 SMA but the downward-pointing RSI suggests that its losing momentum. Long lower wicks on recent candles suggest weak demand at the lower levels, which could keep buyers hopeful. Should the 50 SMA hold, buyers will look toward 6100 and 6130 for fresh record highs. However, should sellers take out the 50 SMA, a retest of 5915 could occur. It would take a break below here to create a lower low.

FX markets – USD falls, EUR/USD rises

USD is falling as it loses some of its risk premium after Trump paused tariffs on Canada and Mexico and despite strong ADP payroll data.

EUR/USD has recovered above 1.04 capitalising on the weaker USD and despite a downward revision to the eurozone services PMI. The PMI was lowered to 51.3 from the preliminary reading of 51.4 and southwards from 51.6 in December. The sustained fall in new business orders points to a fragile recovery.

GBP/USD is rising above 1.25 on USD weakness as fears regarding Trump’s trade tariffs ease slightly and after UK services PMI data. While the services PMI was downwardly revised cost pressures remained elevated.

Oil falls as inventories rise, trade concerns linger

Oil prices are falling for a second straight session amid rising US inventories and concerns surrounding US-China trade tensions, which have raised fears of weaker demand.

WTI fell to its lowest level this year after China announced retaliatory tariffs on the US, including oil imports and LNG.

Trump is not in any rush to hold talks with China rising some worries of a prolonged trade war between the world’s two largest economies. Trump trade chaos is not good for global growth.

Separately crude oil stockpiles rose 5.03 million barrels and gasoline inventories rose 5.43 million barrels, raising concerns over weak demand.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.