S&P 500 Forecast: SPX muted as Netflix drops 7%, Tesla up next

US futures                                         

Dow futures -0.07%, S&P futures 0.03%  & Nasdaq futures -0.20%

In Europe                                                                        

FTSE 0.22% & DAX 0%

• Stocks steady near record highs
• Netflix drops after earnings miss
• Tesla to report after the close
• Oil on trade talk optimism

Netflix disappoints, Tesla reports after the close

 U.S. Stocks are heading for a quiet open amid a cautious mood as investors weigh up earnings, including Netflix, which posted weaker-than-expected profits, pressuring market sentiment

With equities hovering near record highs and valuations stretched, investors are looking for exceptional fundamentals to justify these lofty prices.

Despite solid results from several big names yesterday, the markets ended virtually unchanged. Of the 78 S&P 500 companies that have now reported 87% have beaten earnings estimates.

Meanwhile, signs of tensions thawing between the US and China have helped support the market mood. Trump is expected to meet with Chinese President Xi Jinping next week, although he did say that it may not happen.

Elsewhere, Trump refused a request by the Democrats to meet until the three-week-old government shutdown ends. Hopes of the shutdown ending this week are fading with no signs of a resolution soon.

Friday's inflation data is still expected, which comes ahead of next week's Federal Reserve interest rate decision, where policymakers may be forced to navigate the meeting without a full picture of the economy.

Corporate news             

Netflix is falling 7% premarket after earnings missed forecast due to a Brazilian tax dispute and as revenue forecasts disappoint lofty expectations.] The streaming giant posted EPS of $5.87 versus $6.97 expected, on revenue of $11.51 billion in line with forecasts. Netflix blamed the miss on a $619 million tax dispute with Brazilian authorities, which overshadowed an otherwise strong quarter. However, without subscriber numbers and with the share price up 40% this year, outperforming its peers, investors wanted to see nothing less than perfection.

Tesla earnings will be in focus, kicking off the highly anticipated reports from the magnificent seven mega-cap tech groups. The EV maker unveiled record Q3 deliveries earlier this month, fueled by a marketing and discounting campaign aimed at boosting sales ahead of the withdrawal of U.S. tax credits for EV buyers

Mattel, the toy company, fell premarket after disappointing investors by missing earnings estimates and reporting weaker North American sales.

S&P 500 forecast – technical analysis.

The S&P 500 recovered from the 6500 low, rebounding to current levels of 6730, just below the 6760 record high. The uptrend remains intact, and buyers will look to rise above 6760 to fresh record levels towards 6800. Support is seen at 6500. A break below here creates a lower low.

FX markets – USD rises, GBP/USD falls

The U.S. dollar is rising for a fourth straight session, supported by easing U.S.-China trade worries and despite the ongoing government shutdown, which has no resolution in sight.

EUR/USD is under pressure against a stronger U.S. dollar amid a quiet economic calendar. Attention will be on ECB policymakers, including President Christine Lagarde and Vice President Luis de Guidos, who are due to speak. The ECB is expected to leave interest rates unchanged in the meeting next week.

The GBP/USD is falling as the UK inflation came in below expectations, remaining unchanged at 3.8% below the 4% forecast. Core inflation was also lower at 3.5%. The market has lifted December rate cut expectations to 75% pulling the pound lower.

Oil rallies on trade talk optimism

Oil prices rose for a third straight session, jumping 2% as hopes of progress in trade talks between the US, China, and India boosted the market.

The US and India are reportedly close to finalising a trade deal which could see the latter gradually cut imports of Russian crude oil, potentially lifting demand for oil produced outside of Russia.

The progress of US-China trade talks is also helping to support the demand outlook. Although a meeting between Trump and Jinping is not due until next week.

Meanwhile, a summit between Trump and Russian President Putin has been put on hold, as Western governments pressured Asian buyers to reduce their purchases of Russian oil.

Separately, the Department of Energy said that it will buy 1 million barrels of crude oil for the strategic petroleum reserve as it seeks to take advantage of the low prices to replenish stockpiles.