S&P500 Forecast: S&P500 trades cautiously ahead of Fed Chair Powell's speech

US futures

Dow futures +0.18% at 34184

S&P futures +0.13% at 4382

Nasdaq futures +0.0% at 15298

In Europe

FTSE +0.04% at 7413

Dax +0.34% at 15206

All eyes on Powell’s speech for further clues over rates
S&P500 on longest winning run since 2021
Disney to report earnings after the bell
Oil falls to a 3-month low

All eyes on Powell’s speech for further clues over rates

US stocks are heading for a subdued open after gains in the previous session as investors digest the latest comments from Federal Reserve speakers and look ahead to a speech by Federal Reserve Chair Jerome Powell later today.

The S&P500 and tech-heavy Nasdaq posted their 7th and 8th straight day of gains on Tuesday, marking the longest winning streak for both indices since 2021. The market has been buoyed by optimism that the Federal Rese could adopt a more dovish stance to monetary policy after a weak-than-expected non-farm payrolls report on Friday and after Jeremy Powell, last week, hinted that financial conditions were tighter, which was doing some of the heavy lifting for the Fed.

However, since then, treasury yields have fallen, making it a catch-22 situation for the Fed. Some policymakers, such as Governor Michelle Bowman and Minneapolis Fed President Neel Kashkari, have said they would support another interest rate hike if inflation remains sticky and owing to the resilience of the US economy.

All eyes are on Jerome Powell, who could provide further insight over the future path for interest rates. A hawkish-sounding Powell could kick stocks lower and boost the dollar.

Corporate news

Disney is due to report after the bell. Attention will be on streaming figures, which have seen lacklustre growth, putting pressure on the share price, which has dropped 15% over the past 12 months. Attention will also be on the international theme parks and cruises division, which has seen strong growth, helping to offset weakness in other parts of the business. The market will be keen to see whether this continues.

Bumble is falling over 6% on the open after the online dating company disappointed with its Q4 revenue forecast. Signs of persistent inflation and growing competition meant users were spending less within the app.

Warner Bros Discovery is set to fall over 1% on the open after posting a 12% decline in advertising IN its portfolio of TV networks. However, it wasn't all bad news, and the media giant narrowed Q3 losses thanks to the success of Barbie the movie.

Rivian is set to open firmly higher after the EV maker lifted its production forecast buy 2000 vehicles for the full year to 54,000 thanks to sustained demand for its trucks and SUVs.

S&P500 forecast – technical analysis

The S&P500 has rebounded from 4100, pushing above the 200, 20, and 50 SMAs, and is looking to test resistance at 4400, the October high. The RSI supports further gains. A break above 4400 could see a test of the falling trendline at 4430, before bringing 4500 into target. Failure to rise above 4400 could see sellers test 4340 the 50 sma, and 4300 round number.

FX markets – USD rises, GBP falls

The USD is rising for a third straight day as investors look ahead to a speech by Fed Chair Powell, who could shed more light on the future path for interest rates.

EUR/USD is falling for a third straight day after German inflation was confirmed to cool to 3.8%, down from 4.5%. Inflation in Germany is cooling as the economy stalls. Meanwhile, eurozone retail sales fell by more than expected, dropping 0.3% after falling 0.7% in August. The data suggests that households are struggling amid record interest rates and still high inflation.

GBPUSD Is falling for a third straight day after Bank of England governor Andrew Bailey failed to convince the market that the central bank will keep rates high for longer. While Bailey stuck to the script, his comments come after Bank of England chief economist Huw Pill suggested that the BoE would be cutting interest rates by autumn next year.

EUR/USD -0.37% at 1.0677

GBP/USD -0.35% at 1.23

Oil falls further on demand worries

Oil benchmarks are falling, extending the 4% losses from the previous session and dropping to a four-month low as demand concerns mount.

According to the US Energy Information Administration (IEA) crude oil production in the US will rise slightly less than previously expected. However, demand is expected to fall. The EIA now expects US petroleum demand to fall by 300,000 barrels per day this year, reversing its previous forecast of 100,000 barrel per day increase.

As well as weakening demand from the US, data this week from China, the world's largest oil importer, showed that exports fell more than expected, reflecting a struggling domestic and global economy.

Separately, data yesterday showed that US crude stockpiles rose by almost 12 million barrels last week, according to the API. The IEA will release inventory data shortly.

API stockpile data is due later today.

WTI crude trades -1.5% at $76.05

Brent trades -1.4% at $80.34

Looking ahead

14:15 Fed Chair Jerome Powell speaks

18:40 Fed Williams speaks

19:00 Fed Barr speaks

18:30 Fed Jefferson speaks

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