SP500 Forecast: SPX cautious ahead of a big week for data and earnings

US futures

Dow futures -0.35% at 40260

S&P futures 0.1% at 5530

Nasdaq futures 0.08% at 19411

In Europe

FTSE 0.3% at 8437

DAX 0.69% at 22399

Stocks are flat after gains last week
US-China trade war de-escalation hopes remain
Big Tech earnings and US data dump this week
Oil holds steady after losses last week

Stocks muted ahead of a busy week

U.S. stocks are set for a quiet open with little change on Monday ahead of a week packed with economic data and earnings from big tech. Trade policy developments also remain in focus.

Last week, the three main indices ended with weekly gains amid optimism that the US and China could be open to de-escalating trade tensions.

However, there has been some confusion over the state of negotiations, highlighting the ongoing uncertainties that investors face as they attempt to piece together the latest developments and figure out what's next in Trump's trade disruption.

This week will be a big week for investors, with data including US GDP core PCE and non-farm payrolls being watched closely for signs of how new tariffs are impacting economic growth, inflation, and the labour market.

Also, this week, investors will be eyeing company earnings, with four of the magnificent seven mega caps, including Microsoft, Amazon, Meta, and Apple, and 180 S&P 500 companies reporting results.

We look at a very different macro environment for the market than in the last earnings release, when Trump assumed the presidency. The laser-focused on US-China, a trade war that has wiped $5.5 trillion from the S&P 500 index, while AI concerns are taking a backseat for now. Many companies have flagged the uncertainty caused by changes in trade policy, with some cutting or pulling annual forecasts.

Even so, earnings season has been relatively upbeat. The S&P 500 earnings are now expected to rise 9.7% in Q1, higher than the April 1 estimate of an 8% gain.

Corporate news

Boeing is rising 2% after a broker upgrade from Bernstein to outperform, as it considers that Boeing will be on a much firmer path in 2023 as it recovers from recent controversies.

Domino's Pizza is falling over 3% after reporting mixed Q1 results. The pizza firm posted EPS of $4.33 on revenue of $1.11 billion, below the $4.07 expected revenue of $1.13 billion.

S&P 500 forecast – technical analysis.

The S&P 500’s recovery from 5100 has stalled at the 5500-55050 resistance zone, which buyers will need to rise above to extend the recovery towards the 200 SMA at 5750. Should the price face rejection in this zone, a retest of 5400 could be on the cards, and below here, 5300. A break below 5150 is needed to create a lower low.

FX markets – USD rises, EUR/USD falls

The USD is unchanged after posting modest gains last week following 4 weeks of declines. Hopes of a less aggressive trade war are offering support to the USD after recent weakness.

The EUR/USD is falling from its 3-year high amid growing expectations that the ECB will cut rates again in June. Eurozone data this week is expected to show inflation eased to 2%, and growth remains subdued at 0.2%. Weak growth and at-target inflation support the view that the ECB will cut again in June.

GBP/USD is rising modestly, adding to small gains last week as risk sentiment improved. The UK economic calendar is relatively quiet, so the USD, US data, and risk sentiment will be key drivers for the pair.

Oil steadies after last week’s losses

Oil prices are holding steady at the start of the week after posting 2.5% losses last week. Investors continue to weigh uncertainty over trade talks between the US and China, the prospect of OPEC, and increasing supply.

U.S. President Trump and Beijing have sent conflicting signals regarding the progress in de-escalating a trade war that could harm global economic growth.

Meanwhile, some members of OPEC+ are expected to suggest that the group increase oil output hikes for a second straight month when they meet on May 5 as they look to favour market share over higher prices.

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