Nasdaq 100 Forecast: QQQ rises ahead of Tesla earnings

US futures

Dow futures 0.31% at 38354

S&P futures 0.63% at 5029

Nasdaq futures 0.43% at 17284

In Europe

FTSE 0.8% at 8040

Dax 1.17% at 18063

• Stocks rise with corporate earnings in focus
• US PMI data is expected to show stronger growth
• Tesla reports after the close
• Oil falls further ahead of inventory data

Stocks rise as corporate results roll in

US stock is pointing to a stronger start on Tuesday with corporate earnings in focus and ahead of PMI data.

Earnings appear to be a welcome distraction for investors after worries surrounding the Middle East and the Federal Reserve keeping interest rates higher for longer sparked a steep sell-off in the previous week.

On the data front, attention will be on US PMI figures, which are expected to show the services and manufacturing sectors expanded at a faster pace in April. Robust data could raise concerns over the Fed’s ability to cut rates. The market has already scaled back rate cut expectations considerably since the start of the year. The markets are pricing in just 39 basis points worth of rate cuts this year, down from about 150 basis points seen at the start of 2024.

US Q1 GDP figures will be released on Thursday, and the Fed's preferred gauge for inflation, core PCE data, will be released on Friday. Strong growth and sticky inflation could see the market rein in rate-cut bets further.

Corporate news

Tesla is in focus as it reports Q1 earnings after the close. The figures come after deliveries fell 8.5% annually in the first quarter. Week Q1 deliveries suggest that price cuts are not having the desired impact and highlight the intense competition in the sector. Expectations are for EPS of $0.55, down $0.85 a year earlier. Revenue is expected to come in at $22.73 billion, down from $25.33 billion in the same quarter a year earlier. The EV maker's share price trades down over 40% this year, underperforming the S&P, which trades around 5% higher.

PepsiCo is pointing to a modestly weaker open despite first-quarter results beating expectations. EPS came in at $1.62, ahead of the $1.52 forecast. Revenue was also ahead of estimates at $18.25 billion.

Apple is set to fall on the open after iPhone sales plummeted in China by 19% in the March quarter. According to figures from Counterpoint Research, this would mark the worst iPhone performance in the region since COVID 2020.

General Motors is set to rise 5% after the auto giant posted Q1 results that beat expectations in both earnings and revenue. GM also lifted its full-year guidance.

Spotify is also looking at a substantial gain on the open after the music streaming company reported profits crossing the $1 billion mark in the quarter for the first time despite monthly active users missing forecasts.

Nasdaq 100 forecast – technical analysis.

The Nasdaq is extending its rebound from 17000, rising above the February low at 17170 as it heads towards the 100 SMA at 17440. A rise above here brings 17800 back into focus. Failure to extend the recovery could see bears retest 17000 to create a lower low, ahead of 16175, 2024 low.

FX markets – USD falls, GBP/USD rises

The USD is falling a modest gain yesterday. Attention is on PMI data and other macro points later in the week for further clues over the Fed’s ability to cut rates.

EUR/USD is rising after eurozone business activity rose faster than expected with the composite PMI hitting 51.4. In April, up from 50.3 in March. The data suggest the economy has returned to growth, which is supported by a strong service sector. However, the manufacturing index contracted at a faster pace.

GBP/USD is rising after UK composite PMI rose to an 11 month high at 54 pointing to a larger than expected rebound from last last year's shallow recession. Strong composite PMI figures came thanks to a jump in services sector activity to 54.9. The report also highlighted a jump in business costs, which rose at the fastest pace in almost a year owing to higher wages and prices for transport and raw materials. This could make the Bank of England more cautious about cutting interest rates.

Oil falls ahead of inventory data.

Oil prices fell on Tuesday, extending the selloff from the previous session despite a short-lived boost from stronger PMI data in Europe.

Oil fell yesterday and is extending its losses in a market still concerned over the outlook for demand, given the prospect of higher interest rates for longer in the US.

Meanwhile easing tensions, or better put- a lack of further escalation between Iran and Israel means the risk premium on oil has been removed putting the price lower.

Looking ahead, US crude oil inventories are expected to have increased last week.

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