S&P 500 Forecast: SPX jumps after Nvidia earnings & a mixed NFP report

US futures                                         

Dow futures 1%, S&P futures 1.5%  & Nasdaq futures 2%

In Europe                                                                        

FTSE 0.66% & DAX 0.92%

• Stocks jump after Nvidia earnings ease AI jitters
• Nvidia beats forecasts & offers impressive guidance
• NFP showed 119k jobs added, but unemployment rose to 4.4%
• Oil rises after a larger-than-forecast inventory draw

Nvidia jumps, NFP paints a mixed picture

US stocks are rising firmly after strong Nvidia earnings and a mixed non-farm payroll report, complicating the Federal Reserve's outlook ahead of its December rate decision.

The September NFP report showed that 119,000 jobs were added, well above the 50k forecast. There was a downward revision of 33,000 for the prior two months.

Unemployment unexpectedly increased to 4.4% up from 4.3% marking the highest level in four years. Wage growth was also softer than expected at 0.2% month on month, down from 0.3% and below the 0.3% forecast.

The data, the first major jobs report following the reopening of the government, paints a mixed picture of the health of the US labour market, complicating the Federal Reserve’s decision next month.

The October non-farm payroll will not be released due to the US government shutdown. As a result, this is the final non-farm payroll report ahead of the December meeting.

The data follows the release of the minutes to the October FOMC meeting yesterday, which showed a more hawkish stance. The minutes showed that many policymakers did not consider a December rate cut necessary.

Markets are now pricing in just a 27% probability of a 25 basis point rate cut in December, unchanged from prior to the data, down from 42% yesterday and down from over 90% a month ago.

Corporate news 

Nvidia has jumped 5% premarket after impressive earnings and strong guidance for the current quarter helped calm investor fears of an AI bubble. Nvidia posted Q3 EPS of $1.30, up from $0.78 in the same period last year, on revenue of $57 billion, up 62% from a year ago. Expectations had been for EPS of $1.25 on revenue of $54.8 billion. The data centre business, which accounts for the bulk of revenue and includes Blackwell AI chips, saw revenue jump 66% to $51.22 billion, beating estimates of $49 billion. CEO Jensen Huang said demand is off the charts and that cloud GPUs are effectively sold out. Impressive numbers from Nvidia, the bellwether for the AI trade, have helped to soothe investor fears over an AI bubble. Those fears had pulled the stock and the wider index lower in recent session.

Walmart is falling despite posting better-than-expected Q3 results. The retailer posted EPS of $0.62, ahead of the $0.60 expected, whilst revenue reached $179.5 billion, surpassing forecasts of $177.45 billion. The results were driven by a strong e-commerce performance, which rose 27% globally.

S&P500 forecast – technical analysis.

After falling below its rising channel, the S&P 500 faced rejection at 6575, recovering higher to test the resistance of the 50 SMA and the lower band of the rising channel. Buyers need to close above this resistance zone to stage a recovery towards 6920, the record high. Failure to retake this level could see the price fall back towards 6575. A break below here and 6500, the October low, could spark a steeper selloff towards 6360, the September low.

FX markets – USD rises, GBP/USD falls

The U.S. dollar has eased back from a six-month high reached after the FOMC minutes, following the NFP report.

EUR/USD is flat following eurozone construction output data that showed the sector accelerated its decline in September. Consumer confidence figures will be released later in the session, as is expected to improve slightly to -14, up from -14.2.

GBP/USD is rising on a weaker USD, despite data showing that UK consumer sentiment deteriorated at the sharpest pace since April. The British Retail Consortium said sentiment has been hit by worries over the upcoming labour budget. While an income tax increase appears to have been ruled out, the chancellor could extend the income tax threshold freeze as she attempts to raise billions of pounds to plug a fiscal black hole. Yeah

Oil rises as US inventories fall

Oil prices are rising on Thursday after dropping in the previous session, boosted by a larger-than-expected draw in US crude stockpiles and a risk-on market mood.

Prices had fallen around 2% in the previous session on reports that the US was renewing its efforts to end the Russia-Ukraine war.

A U.S. sanctions deadline on trading with Russian oil firms Rosneft and Lukoil ends on Friday.

Supporting oil prices, an encouraging picture on the demand side after US crude stockpiles soared by more than expected, creating a draw of 3.4 million barrels, which fell by 44.2 million barrels in the week ending November 14. This was significantly down from the 603,000-barrel draw forecast.