S&P 500 Forecast: SPX edges higher ahead of Fed speakers

US futures

Dow futures 0.17% at 38918

S&P futures 0.15% at 5188

Nasdaq futures 0.0% at 18087

In Europe

FTSE 0.72% at 8328

Dax 1.28% at 18360

• Fed rate cut optimism keeps stocks supported
• Fed speakers in focus amid a quiet economic calendar
• Disney slumps despite beating earnings forecasts
• Oil is holding steady near a 2-month low

Fed rate cut expectations in focus

US stocks are pointing to a modestly higher start as more earnings roll in and as expectations for Federal Reserve interest rate cuts remain in focus.

US indices closed at their highest level in over three weeks yesterday thanks to the weaker-than-expected nonfarm payroll report on Friday and on bets that the U.S. central bank could be on track to cut interest rates twice this year.

Today, the US economic calendar is quiet. Attention will be on Fed speakers, with Neil Kashkari due to speak later in the session. Traders are currently anticipating 45 basis point rate cuts from the Fed this year, with the first rate cut priced in for September and another in December.

Meanwhile, earnings continue to roll in.

Corporate news

Disney is set to open 4% lower despite beating profit forecasts. Disney reported EPS of $1.21 versus $1.10 expected on revenue of $22.08 billion, in line with estimates. The experience segment and streaming businesses drove strong results; however, the traditional TV business continued to lag as millions of Americans drop cable TV each year. Including ESPN+, the streaming unit reported a loss of $18 million in the quarter.

Apple is set to rise after the Wall Street Journal reported that the iPhone maker is developing its own chip to run AI software in data centres.

BP ADRs fell over 2% after the energy giant posted a lower-than-expected underlying profit in Q1 amid a slide in oil and gas prices.

S&P 500 forecast – technical analysis.

In a bullish move, the S&P 500 has broken out of its recent range, extending beyond 5150. Buyers, supported by the RSI above 50, could look to extend gains towards the 5200 round number and 5230 on the way to 5277 and fresh all-time highs. Sellers will look for a move below 5150 to push the price lower towards 5100.

FX markets – USD rises, GBP/USD falls

The USD is edging higher after steep losses last week, and the market is looking toward Fed speakers for more clues about the Fed's future path 4. Rights

EUR/USD is holding steady as investors weigh up stronger-than-expected eurozone retail sales against weaker-than-expected German factory orders. Eurozone retail sales for March saw their most significant increase in 18 months, rising by 0.8% MoM in March, recovering from an upwardly revised 0.3% decline in February. Meanwhile, German industrial production fell 0.4% in March, defying expectations of a rise of 0.4% as the overall picture for the manufacturing sector in Germany remained weak at the end of Q1.

GBP/USD is falling despite UK construction activity growing at its fastest rate in 14 months. The UK construction PMI rose to 53, up from 50.2 in March, marking its fastest growth since February 2023. The data follows solid service sector PMI data last week and ahead of Thursday's Bank of England interest rate decision.

Oil steadies after steep losses last week

Oil futures remain largely unchanged on Tuesday for a second straight day as prices hover near a two-month low.

Investors are weighing up news that Israel rejected a cease-fire proposal for Gaza and, as Israel took control of the Rafah border crossing, vowed to continue military operations.

Meanwhile, OPEC+ is considering possibly increasing oil output before its June meeting.

Oil prices posted the most significant weekly drop since February last week. The price is steadying as the demand outlook remains supported by expectations that the Fed will cut rates several times before the end of the year.