S&P 500 Forecast: SPX falls & is on track to decline across April

US futures

Dow futures -0.44% at 38209

S&P futures -0.42% at 5094

Nasdaq futures -0.50% at 17690

In Europe

FTSE 0.29% at 8170

Dax -0.78% at 17995

Stocks fall in April after 5 months of gains
FOMC 2-day meeting begins today
Amazon to report after the close
Oil steadies as Middle East tensions ease & on Fed jitters

Stocks see worst monthly performance since October

US stocks are pointing to a slightly lower open on Tuesday as investors look cautiously ahead to Amazon results and the start of the Federal Reserve's monetary policy meeting.

The Fed is widely expected to leave interest rates unchanged when it announces its rate decision on Wednesday. Markets will be watching closely to see whether the central bank adopts a more hawkish stance following stickier-than-expected inflation over the quarter.

Concerns about higher interest rates for longer have resulted in stocks falling across April in the first monthly decline in six months. The FOMC and this week’s NFP could set the tone for the coming weeks and help investors decide whether “to sell in May,” as the adage goes.

Across today’s session, investors will weigh U.S. consumer confidence data, which is expected to deteriorate slightly along with earnings from some big household names.

Corporate news

Coca-Cola is set to open modestly lower despite the beverage giant posting quarterly earnings and revenue ahead of forecasts and raising its full-year outlook. Sales in North America were flat for the quarter, which is hitting the share price.

Eli Lilly is set to rise 6.7% on the open after the pharmaceutical giant posted better-than-expected earnings in Q1. It lifted its full-year guidance thanks to solid sales of Mounjurno, its newly launched weight loss drug.

PayPal is set to rise over 7% on the open after the payment system operator posted a stronger-than-expected 14% annual rise in Q1 total payment volumes.

Amazon will report after the close. Investors will be looking closely to see how its AWS cloud computing division performed as it continues to recover from a recent slowdown in clients' spending on cloud services. Amazon's results come after upbeat numbers from peers such as Alphabet and Microsoft last week. A big focus will be on how it plans to turn investments in AI into higher sales and profits.

S&P500 forecast – technical analysis.

The S&P 500 has run into resistance at 5120, just below the 50 SMA, after extending its run up from 4925 the April low. Buyers will need to rise above 5120 and extend gains towards 5150 and on to 5200. Meanwhile, sellers will look to retest 5050, the March low. A break below here opens the door to 5000 the psychological level.

FX markets – USD rises, GBP/USD falls

The USD is rising, rebounding from yesterday's losses as attention turns to the Federal Reserve and the prospect of higher interest rates for longer.

EUR/USD is rising after eurozone GDP data showed 0.4% growth, which was stronger than expected and up from 0% growth in Q4 of 2023. The data highlights the ongoing economic recovery in the region. Meanwhile, inflation was slightly hotter than expected at 2.7%, down from 2.9% but above forecasts of 2.6%. Following the data, the market paired rate cut expectations slightly, with two rate cuts fully priced in and a 76% probability of a third rate cut.

GBP/USD is falling off the UK data, which showed that shop prices rose by the least since December 2021. Figures from the British Retail Consortium showed that food prices food inflation slowed to 0.8% in April down from 1.3% in March and non food goods fell by 0.6% adding to signs of easing inflationary pressures which will be well received by the Bank of England as it asses when to cut rates.

Oil weighs up cease-fire talks and Fed jitters.

Oil prices are holding steady after falling yesterday as Israel-Hamas talks raised hopes of a ceasefire and as investors wait for signals from the Federal Reserve.

Hopes of a cease-fire in the Middle East saw oil prices fall at the start of the week as the risk premium on oil deteriorated. However, attacks are continuing by Houthis militants on traffic in the Suez Canal.

Meanwhile, the upcoming Federal Reserve meeting will also set the tone for the oil markets, with the prospects of interest rates being kept higher for longer, lifting the US dollar and hurting the oil demand outlook.

Data from China, the world’s largest oil importer, offered mixed views. While official figures showed that manufacturing growth slowed, the Caixin manufacturing PMI for China showed the strongest expansion in 14 months.

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