S&P500 Forecast: SPX rises ahead of a HUGE week for earnings and data

US futures

Dow future 0.69% at 42426

S&P futures 0.56% at 5841

Nasdaq futures 0.43% at 20443

In Europe

FTSE 0.08% at 8257

Dax 0.14% at 19471

• Stocks rise after losses last week
• Mega cap earnings, key US data & US election countdown
• Oil tumbles as the risk premium fades

Mega cap earnings, US data & US election countdown

U.S. stocks point to a stronger open, recouping some of last week's losses ahead of key corporate earnings, a big week for US data and the final phase of the countdown for the U.S. presidential election

This week is a big week for corporate earnings, with 169 S&P 500 companies due to reports across the week, including the bulk of magnificent 7 mega-cap tech firms, including Alphabet, Meta, Microsoft, Apple, and Amazon. These makeup around 23% of the S&P 500 weighting, and investor reactions could impact broader risk sentiment.

While the US economic calendar is quiet today, there are plenty of crucial data points across the week, including the Fed's preferred gauge for inflation, the personal consumption index, Q3 GDP, and, on Friday, the US nonfarm payroll report.

The data comes as the market is almost certain that the Fed will cut interest rates by 25 basis points at the central bank's next meeting, which is on November 6 and 7, shortly after the November 5th U.S. presidential election.

The market is broadly pricing in a Donald Trump win, with stocks and assets tied to Trump rising. Bitcoin and Trump Media have been higher in recent weeks while the Mexican peso is lower.

Corporate news

Apple is set to open higher ahead of its earnings later this week. The company is on track to become the first firm to reach $4 trillion in market cap.

Tesla is extending gains from last week after CEO Elon Musk announced plans to grow vehicle sales by 30% next year, thanks to cheaper models and enthusiasm for self-driving software.

Oil majors such as Exxon Mobil and Chevron are falling 2% on the back of oil prices slumping 6% amid reduced geopolitical tensions in the Middle East.

S&P500 forecast – technical analysis.

The S&P500 trades above its multi-month rising trendline but has eased back from record highs of 5882. Buyers will look to rise above the 5882, to extend gains towards 5900. Sellers will need to break below 5800, last week’s low, to negate the near-term uptrend. Below there 5660, the October low comes into focus.

FX markets – USD falls, EUR/USD rises

The USD is falling on profit-taking but is still set for its largest monthly rise since 2022. The U.S. dollar has risen firmly on expectations that the Fed will cut interest rates at a slower pace and amid data that shows signs of strength in the US economy. The dollar is also benefiting from the possibility of Trump winning the election.

EUR/USD is rising, capitalizing on the weaker U.S. dollar ahead of a busy week for both the eurozone and the US economic calendars. However, gains in the euro could be limited given further rate cuts are expected from the ECB.

GBP/USD is rising towards 1.30 amid USD weakness, and investors look nervously ahead to the UK Budget this week. Recent data has suggested that UK businesses were nervous about the prospect of tax hikes when Rachel Reeves announces the budget on Wednesday.

Oil tumbles as risk premium fades

Oil prices fell over 6% at the start of the week as the Middle East risk premium fades and amid concerns about the demand outlook.

Israel launched a series of airstrikes against its rival Iran at the weekend, delivering the long-awaited retaliation for Tehran's most recent missile attack. Israel avoided oil infrastructure, and Iran has downplayed extended the damage, leading to optimism of a de-escalation from recent tensions in the region.

While there is still risk in the Middle East, supply disruption is looking less likely. At the same time, the OPEC plus group is expected to start unwinding some production cuts in December, raising output by around 180,000 barrels per day. This is likely to keep the lead on any gains in oil prices.

Meanwhile, on the demand side, concerns over China's demand outlook remain despite the recent stimulus announcement.