S&P 500 Forecast: SPX rises ahead of tech earnings and as the Fed meeting begins

US futures         

Dow futures 0.12%, S&P 500 futures 0.3%  & Nasdaq futures  0.39%

European futures

FTSE -0.9%,  DAX  0.2%

• US stocks rise, extending yesterday’s gains
• Tech sentiment remains supported by Anthropic IPO
• Fed rate decision and mega-cap tech earnings are in focus  
• Oil prices slip on hopes of diplomacy

U.S. stocks rise as oil eases and investors await tech earnings

U.S. stocks are rising as oil prices ease and investors cautiously look ahead to U.S. megacap earnings as a test of the AI trade. The Federal Reserve has also kicked off its two-day meeting ahead of tomorrow's announcement.

Wall Street indices are extending gains from yesterday, when enthusiasm for tech stocks revived after Anthropic's IPO filing.

Tech stocks remain in focus, underpinned by Anthropic's long-awaited IPO filing. The document highlighted the AI startup's ambitious AI plans as well as surging revenue in the first half. However, the filing also underlined the steep costs associated with scaling AI models, with the company's net loss widening to $80.7 billion in the first half of the year.

Its plans to go public come amid heightened scrutiny of AI-related stocks, as the market increasingly questions whether debt-funded spending in the sector will generate adequate returns. As a result, the tech-heavy Nasdaq has fallen over the past two weeks.

A host of megacap earnings will provide further cues on the AI trade this week, with Alphabet and Microsoft reporting tomorrow and Amazon on Thursday.

Separately, the Federal Reserve has kicked off its two-day meeting, with a rate announcement due tomorrow. The market is pricing in a 90% probability that the Fed will leave rates unchanged, but still sees an 80% probability of a hike in December. As a result, the focus will be on the FOMC statement and comments by Federal Reserve Chair Kevin Warsh. A hawkish hold could put further pressure on stocks.

Corporate movers

PayPal is falling after reporting a revenue miss in Q3. The company reported $8.58 billion in net revenue, below the $8.71 billion forecast. Earnings beat expectations, and the payment provider lifted its full-year profit guidance.

Coca-Cola is rising 0.3% after raising its full-year outlook for a third straight quarter, despite lacklustre demand in its home market. Coke expects EPS to rise by 11%, up from 9% previously.

Nvidia and Meta Platforms are in focus after Nvidia said it would invest $3 billion in Meta, following Meta's announcement of plans to raise $95 billion to support its AI infrastructure buildout. Meta's share price is edging higher after falling almost 10% last week.

Boeing was slightly higher after reporting mixed Q3 earnings. The airline manufacturer posted a wider-than-expected loss, although revenue came in above expectations.

S&P 500 forecast – technical analysis

After once again finding support at the 7,620 level, the S&P 500 has rebounded, pushing above the 50 EMA and the rising trendline to 7,700. Should momentum continue to build, buyers will look to extend gains above 7,750 to bring 7,840 into focus and potentially reach fresh record highs.

The 7,620 level is key support. Should sellers break below here, that would open the door to 7,500 before exposing the 200 EMA at 7,350 and the July low at 7,300.

FX markets – USD rises, EUR/USD falls

The U.S. dollar is rising, extending gains ahead of the Federal Reserve rate decision tomorrow. The dollar is benefiting from weakness in the euro and the yen. The USD could strengthen if the Fed opts for a hawkish hold, cementing expectations for a December hike.

EUR/USD is falling for a fifth straight day amid USD strength and greater focus on the Fed-ECB rate differential ahead of the central bank meetings this week. The euro continues to underperform due to ongoing concerns over the French bond market. The French 10-year yield is rising as political and fiscal concerns linger.

GBP/USD is falling amid a stronger USD and caution ahead of tomorrow's Budget. The market will be focused on whether the Budget is credible and what an increase in the minimum wage could mean for the UK economy. The Chancellor is expected to announce a 3.9% increase in the minimum wage.

Oil slips on hopes of diplomacy in the Middle East

Oil prices are falling on Tuesday, giving back earlier gains as investors weigh diplomatic progress in the Middle East against renewed Houthi attacks on Saudi Arabia.

Talks between Saudi Arabia, Turkey and Pakistan in Tehran have raised hopes of a diplomatic breakthrough, helping ease some of the geopolitical risk premium. However, renewed attacks by Iran-aligned Houthis and continued disruption to commercial shipping through the Strait of Hormuz highlight persistent supply risks, limiting the downside.

According to ANZ research, Gulf crude exports have fallen for four consecutive weeks, while flows through the Strait of Hormuz remain at just 60% of normal levels.

With supply constrained, prices are likely to remain supported. A sustained decline will require clearer diplomatic progress and a recovery in shipping flows.