S&P 500 Forecast: SPX rises after SpaceX jumps, Meta up next

US futures         

Dow futures 0.15%, S&P 500 futures 0.36%  & Nasdaq futures  0.67%

European futures

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• US stocks open higher with tech leading
• SpaceX, Super Micro Computer smash forecasts easing AI worries
• Meta, Tesla report after the close
• Oil prices rise as Iran-US diplomatic progress still a way off

U.S. stocks open higher as AI optimism returns

U.S. stocks are pointing to a moderately higher open as investors digest the latest corporate earnings and developments in the AI sector ahead of more results from Tesla and Meta Platforms later today.

After closing mixed in the previous session, stocks are heading higher after SpaceX and Super Micro Computer earnings helped revive optimism in the AI trade and ease concerns about the sustainability of the global investment boom in AI. SpaceX's results appear to have given the market what it was looking for: evidence that AI demand remains very real.

Improved risk sentiment has been slightly tempered by another leg higher in oil prices, as Brent crude closed in on $110 a barrel amid attacks on vessels around the Strait of Hormuz. Treasury yields have been little changed despite the rise in oil prices.

Markets remain on edge as risks look a little more contained than this time last week. However, yields remain sticky above 5%, so financing worries aren't going away anytime soon. The market seems prepared to separate winners from losers, rotating towards quality rather than selling out of equities completely.

The U.S. macroeconomic calendar is quiet, while Federal Reserve officials are in a blackout period ahead of next week's rate decision.

Corporate movers

SpaceX has gained 8% after Elon Musk's rocket company posted a 161% jump in Q3 revenue to $14.58 billion. Net income also swung into a profit of $4.4 billion, up from a $1.1 billion loss in the same period last year. Elon Musk also announced that SpaceX and Tesla are looking at a deal to unite the two public companies.

Other aerospace companies, such as Rocket Lab and Firefly Aerospace, are also rising sharply, following SpaceX's shares higher.

Super Micro Computer is up 12% pre-market after the data centre server company lifted its fiscal Q1 revenue forecast to $18.5 billion–$19.5 billion, up from a previous range of $14.5 billion–$15.5 billion.

Netflix is falling 7% after the streaming giant reported Q3 revenue that was in line with expectations. Sales came in at $12.87 billion, up 12% year-on-year, boosted by growth in membership and an increase in subscription prices.

S&P 500 forecast – technical analysis

The S&P 500 has pulled back from its record high of 78.30, trading at 77.40 at the time of writing. The price remains above its 50 and 200 EMA, as well as its rising trend line, keeping the outlook constructive.

Buyers will look to extend gains above 78.30 and push towards fresh record highs. A break above this level would support the current bullish picture.

On the downside, immediate support can be seen at 76.80, the 50 EMA and the rising trend line support. A break below 76.20, the October low, could open the door to 75.00, the September low. From here, attention turns to 73.40, the 200 EMA, ahead of 73.00, the July nadir.

FX markets – dollar holds steady, euro falls

The USD is holding steady after falling 0.3% yesterday and reaching its lowest level since 1 October. This week has been quiet for economic data, leaving few catalysts for the currency, although Treasury yields continue to fall despite rising oil prices.

EUR/USD is lower despite a weaker U.S. dollar, as France's political uncertainty and debt issues weigh. The French government was forced to impose partial curfews in several cities this week as protests turned violent. French bond yields continue to rise, with the 10-year French OAT yield at 4.98%, its highest level in 24 years, adding further pressure to the euro.

GBP/USD is rising modestly after hotter-than-expected UK inflation data. CPI rose to 3.5% year-on-year in September, up from 3.1% in August and ahead of expectations of 3.4%, amid rising fuel costs. Core inflation, which removes more volatile items such as food and fuel, rose to 2.8%, up from 2.6%. Meanwhile, services inflation, which is watched closely by the Bank of England, jumped to 3.7%, rising for the first time since April and suggesting inflationary pressures are spreading through the economy. The data has cemented expectations of a November BoE rate hike, with several more rate hikes expected over the coming 12 months.

Oil rises as Middle East tensions lift supply concerns

Oil prices have jumped on Wednesday amid ongoing supply concerns in the Middle East after Iran dashed any optimism surrounding diplomatic progress, at least in the near term.

Iran has said there is little reason to expect diplomatic progress with the U.S., insisting that the U.S. cannot expect dialogue while blockading and threatening Iran. Furthermore, Iran's foreign minister has said that Iran is fully prepared to defend itself.

With geopolitical tensions remaining high, oil prices remain underpinned. Further disruption to shipping could keep a risk premium in prices, particularly if supply flows are affected.

Eighteen vessel attacks have been recorded over the past two weeks, suggesting that Iran is targeting tankers beyond the Strait of Hormuz, reaching into the Gulf of Oman.

Separately, crude oil stockpiles fell by 4.9 million barrels over the week ending 16 October, with gasoline and distillate inventories also down. This is supporting prices ahead of government inventory data due today.