S&P 500 Forecast: SPX muted as tech worries persist

US futures                                            

Dow futures 0.01%, S&P futures 0.03%  & Nasdaq futures 0.01%

In Europe                                                                           

FTSE -0.18 & DAX 0.47%

• Stocks stall after Friday’s recovery.
• Tech stocks fell last week while the Dow rose to 50k
• Yen rises after Takaichi wins the election
• Oil steadies on the prospect of further US-Iran talks

Tech stocks fail to extend Friday’s rally

US futures are pointing to a quiet open after heightened volatility last week, during which tech stocks came under pressure as the Dow Jones rose above 50,000.

The S&P 500 and the NASDAQ rebounded on Friday after three consecutive days of losses, as the AI trade came under renewed scrutiny amid concerns about heavy capital-expenditure forecasts. Several big tech results have revived investor concerns about huge spending, with Amazon, Google, Meta, and Microsoft collectively expected to spend around $650 billion in the race to win AI dominance.

Still, Friday's rebound in tech hasn't held up, and futures are pointing to a lower start today. Meanwhile, the Dow Jones holds above 50,000, boosted by rotation into value.

The next big test for AI shares will be Nvidia's earnings later this month. NVIDIA trades 1% lower premarket; other chip stocks such as Micron Technology and Broadcom are also trading over 1% lower.

Attention also turns to economic data, with Wednesday's January nonfarm payrolls report and Friday's CPI report, both of which can provide essential clues about the timing of the Fed’s next move. Weak jobs figures last week raised concerns over the health of the labour market.

Corporate news

Novo Nordisk is rising 5% after Him & Hers pulled its copycat weight loss pill off the market after Novo threatened legal action against the telehealth firm. His & Hers has sunk 18%

Micron Technologies is falling after a report indicated that Samsung Electronics would begin mass production of next-generation high-bandwidth memory chips this month, intensifying competition within the sector.

S&P500 forecast – technical analysis.

The S&P 500 broke below the 50 SMA and the rising trendline on Thursday to a low of 6730, before rebounding to test the 50 SMA and rising trendline resistance around 6900. Momentum is fading. Should buyers hold above this resistance, attention turns to 7000. A break below 6900 opens the door to 6800 and 6735. A break below here creates a lower low and exposes the 200 SMA at 6500.

FX markets – USD falls, USD/JPY falls

The USD is falling after last week's employment figures were weaker than expected, boosting expectations that the Federal Reserve will need to do more to support the labour market. This week's economic releases, including the nonfarm payrolls report and the CPI, could tip the scales.

USD/JPY is falling amid a stronger yen following Prime Minister Takaichi’s landslide victory in Sunday's election. The prospect of a stable government, coupled with serious warnings from the Japanese finance minister and top currency diplomat, deterred investors from reviving the sell Takaichi trade, leading to significant yen appreciation. The results do, however, hand Takeichi a stronger mandate for her fiscal expansive policies, which come at a time when Japanese public finances are under strain.

GBP/USD is rising amid a weaker U.S. dollar and despite rising political uncertainty. The Prime Minister, Kier Starmer, appears to be on increasingly shaky ground following the resignation of a close ally and amid scrutiny of a key diplomatic appointment. This situation, combined with the dovish Bank of England meeting, could limit sterling's upside.

Oil steadies on the prospect of further US-Iran talks

Oil prices are holding steady on Monday after the US and Iran pledged to continue indirect talks, easing concerns about supply; however, India's decision to step away from Russian oil purchases is providing a floor for prices.

Following Friday's peace talks, Iran and the US have pledged to continue negotiations, which both sides described as positive. The talks come as the US has built a military presence in the region; however, optimism about the outlook is keeping the oil risk premium steady.

Separately, India, once one of the largest buyers of Russian seaborne crude, is avoiding purchases for April delivery after agreeing a trade deal with the US that includes a halt to Russian oil purchases.