S&P 500 Forecast: SPX holds steady as tech stocks decline and banks rise post-earnings

US futures        

Dow futures 0.76%, S&P 500 futures 0.02%  & Nasdaq futures  -0.69%

European futures

FTSE 0.74%,  DAX  0.27%

• US stocks head to a mixed open
• Oil prices and Treasury yields fall
•  Banks rise after mixed earnings, tech stocks fall
• Oil falls on Russian diesel release optimism

U.S. Stocks Mixed as Tech Stocks Slide and Banks Report Earnings

U.S. stocks are mixed ahead of the open on Tuesday, with tech stocks leading the decline as investors also weigh bank earnings.

On the one hand, falling oil prices and easing Treasury yields are supporting risk sentiment. Oil is trading almost 2% lower on hopes surrounding additional Russian diesel exports, which are helping to offset ongoing concerns about supply from the Middle East.

Markets broadly expect the situation in the Middle East to remain contained ahead of the midterm elections.

Treasury yields have eased to 5.18%, down from 5.34% last week. Investors will look cautiously towards tomorrow's U.S. CPI and Thursday's PPI data for further clues on the Fed's rate outlook. With just a 19% probability of an October rate hike priced in, even a hot CPI report may do little to change expectations for this month. However, markets are still pricing in an 85% probability of a hike before year-end, so an upside inflation surprise could push those expectations higher.

Elsewhere, tech stocks are under pressure, with the Nasdaq underperforming its peers as chipmakers extend yesterday's decline. This follows reports that China's CXMT has made progress on new memory architecture, potentially threatening Korean and U.S. competitors.

Banks are also mixed, with Goldman Sachs rising on strong equity trading results, while J.P. Morgan is under pressure after a rare earnings miss, as weaker fixed-income trading and rising expenses weighed on results.

Corporate Movers - Bank's earnings

J.P. Morgan shares are under pressure after profits rose but fell short of estimates for the first time in nearly three years. Market volatility and an uncertain economic outlook have dampened deal-making and reduced bond market trading in recent months.

The bank reported a 6% rise in profits year on year to $15.3 billion, or $5.57 per share, below forecasts of $5.90. Revenue rose 8% to $50.2 billion from $46.4 billion a year earlier.

Investment banking fees fell 8% from the second quarter, although they were up 14% year on year. Fixed-income trading revenue declined 4%, while equity markets revenue surged 15%. Net interest income increased 6% quarter on quarter to $24.7 billion, and average loans rose 10% year on year. J.P. Morgan expects net interest income of around $106.2 billion for the year.

Goldman Sachs is rising after Q3 earnings came in well above analysts' forecasts, supported by equity trading and deal-making. Earnings per share came in at $17.01, around $4 above average estimates. Net revenue reached $18.68 billion, against consensus of $16.9 billion and up from $15.18 billion a year earlier, marking a 23% increase.

Equities did much of the work, with trading revenue reaching $6.44 billion, beating expectations, although below the record $7.42 billion reported in the second quarter. Fixed-income trading revenue came in at $3.47 billion, significantly below expectations and down 1% year on year. Investment banking fees were higher than expected at $3.22 billion, while the asset management division reported record management fees.

Wells Fargo is rising after reporting Q3 earnings that beat Wall Street estimates, as loan growth and firmer interest income supported performance, although revenue disappointed. The bank reported earnings per share of $1.87, up from $1.66 a year earlier. However, revenue of $21.87 billion missed forecasts of $22.31 billion. Net interest income increased 5% to $12.52 billion, helped by the removal of the Fed's asset cap, which has allowed Wells Fargo to deploy more of its balance sheet and compete more aggressively.

Memory chip stocks are falling following a downbeat session in South Korea as concerns over valuations grow. These concerns follow reports that CXMT plans to roll out a new, more powerful chip by the end of 2026. SanDisk is down 4.6%, Micron is shedding 3.7%, and Seagate is off by 5%.

S&P 500 Forecast – Technical Analysis

The S&P 500 broke out of its symmetrical triangle pattern, rising to a fresh record high of 7,840 before easing back to 7,800, where it trades now. So far, the breakout has lacked momentum. A pickup in buying could see bulls target 7,900, followed by 8,000.

On the downside, support levels will be important in determining whether the breakout holds. A move below 7750 and back into the triangle would weaken the bullish outlook, while a break below the lower boundary at 7650 would point to a potential downside reversal.

FX Markets – Dollar Eases from 18-Month High

The U.S. dollar is under pressure, pulling back from an 18-month high as oil prices and Treasury yields ease. Attention is turning to tomorrow's CPI data for further clues on the outlook for Fed policy. Markets still see an 85% chance of a rate hike before year-end, helping keep the dollar supported.

EUR/USD is rising on USD weakness and recovering from an 18-month low. However, concerns over France’s public finances ahead of next year’s election remain and could limit the upside. France’s 2027 budget plans to reduce the fiscal deficit to 5% of GDP but uncertainty is mounting over whether this can be secured.

GBP/USD is rising, recovering from 1.3200, supported by the IMF upgrading its UK growth forecast even as it warns that the cost-of-living crisis and price pressures will continue to affect households. The IMF sees the UK economy growing by 1.2% this year, an upward revision of 0.5 percentage points from April, partly on expectations that AI will help drive growth.

However, the IMF has also warned Chancellor John Healey against unfunded giveaways in the upcoming budget, which could undermine fiscal credibility.

Oil eases on Russian diesel optimism

Oil prices are falling on hopes that Russia will export more diesel than initially expected under its agreement with the U.S.

Russia's Deputy Prime Minister said late Monday that the country would be able to release diesel export volumes above those announced by President Trump over the weekend.

Meanwhile, questions remain over the energy ceasefire between Russia and Ukraine announced by Trump at the weekend. Russia has reportedly targeted Ukrainian energy infrastructure, while Zelensky said the agreement came as news to him.

These developments are helping ease oil prices, although the downside remains limited by the ongoing conflict in the Middle East.

Iran-backed Houthis have continued attacks on Saudi infrastructure, including energy facilities. This, combined with the ongoing stalemate between the U.S. and Iran over the Strait of Hormuz, is keeping supply concerns alive.

While developments between Russia and Ukraine have helped oil prices ease, prices remain supported as the Middle East conflict continues and there are still no signs of shipping returning to normal through the Strait of Hormuz.