S&P 500 forecast: S&P 500 drifts on Black Friday

US futures

Dow futures -0.2% at 35150

S&P futures +0.38% at 4554

Nasdaq futures +0.51% at 16013

In Europe

FTSE -0.02% at 7481

Dax +0.5% at 16000

November is shaping up to be the strongest month in 3 years
Services PMI data is expected at 50.4 vs 50.6
Retail stocks in focus as the holiday shopping period begins
Nvidia falls on China chip delay

November set to be best month in 3 years

U.S. stocks look to drift lower on the open on Friday, extending November’s rally ahead of a half day of trading.

US indices closed higher on Wednesday ahead of the Thanksgiving break and are on track to book outsized monthly gains in November as economic data has boosted optimism that the Federal Reserve has finished hiking interest rates.

The NASDAQ 100 is up over 11% so far in November, the Dow Jones industrial by almost 7%, while the S&P 500 has gained over 8%, making this the strongest November for stocks in three years.

News that Hamas and Israel have started a four-day ceasefire today, with the release of hostages and prisoners, could also help keep sentiment buoyed.

Looking ahead, the focus is on PMI data. The services PMI is expected to tick down to 50.4 from 50.6 the previous month, while the manufacturing PMI is expected to contract to 49.8, down from 50. Weaker than unexpected data could add to the optimism that the U.S. economy is cooling and the Fed won't need to raise rates further.

Corporate news

Retail stocks will be in focus across the session, given today is Black Friday, the annual sale that kicks off the crucial holiday shopping season.

According to a survey by the National Retail Federation, a record 130.7 million Americans are expected to shop either online or in-store. However, households are facing financial pressure amid high-interest rates and inflation. As a result, US holiday spending is expected to rise at the slowest pace in five years.

Nvidia is set to fall on the open after the chip maker informed Chinese clients of a delay in launching its new AI chip H20, designed to comply with US export controls.

.S&P 500 forecast – technical analysis

The S&P500 is grinding higher, taking out resistance at 4550, just above the October high, enabling buyers to focus on 4600 the July high and 4640 the March 2022 high. Failure to hold above 4550 could see the price fall back towards the 4500 round number and 4450.

FX markets – USD falls, GBP/USD rises

The USD is falling for a second straight day and is set to fall across the week in low-volume trade owing to the Thanksgiving holiday. Bets that the Fed is at peak interest rates keep the USD under pressure.

EUR/USD is pushing higher after German Ifo business sentiment improved for a second straight month, rising to 87.3 in November up from 86.9 in the previous month. The data shows that there has been no impact for now from a court ruling that has put a hole in German government finances. German GDP data confirmed that the eurozone's largest economy contracted by 0.1% in Q3.

GBP/USD is rising above 1.2550, extending gains for a second day after the stronger-than-expected services PMI figures yesterday, which combined with the chancellor's autumn statement, have investors pushing back expectations of a rate cut by the Bank of England. Expectations are now for 60 basis points worth of cuts in 2024, with the first fully priced in cut in September. Just a week earlier, the market had been expecting 1% cuts next year, with the first fully priced cut in August.

EUR/USD +0.10% at 1.0950

GBP/USD +0.33% at 1.2575

Oil looks to the OPEC+ meeting next week

Oil prices are holding steady after two straight days of decline as traders adopt a wait-and-see approach ahead of next week's OPEC+ meeting, which could see the oil cartel agree to further oil production cuts.

Both Brent and WTI are on track to book their first weekly gain in five weeks, boosted by optimism that Saudi Arabia and Russia together with the other OPEC+ producer group countries will cut supply further to support oil prices into 2024.

However, there are clearly some contentions within the group. OPEC+ caught the market off guard this week by delaying its meeting as producers struggled to reach a consensus on production levels. Traders became spooked by the uncertainty surrounding the meeting and oil prices dropped midweek.

Given the recent declines in oil prices since mid-October, an extension of existing cuts is looking likely.

Trading is likely to remain subdued going to the Thanksgiving holiday.

WTI crude trades +0.12% at $76.35

Brent trades +0.13% at $81.39

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