S&P 500 Forecast: SPX rises with US-Japan trade deal, TSLA, GOOGL report
Stocks are set to open higher on Wednesday after a new trade agreement between the US and Japan was announced, one of the most significant of the preliminary trade deals reached so far. Optimism surrounding AI also helps sentiment as Magnificent Seven earnings kick off with Tesla and Alphabet.
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US futures
Dow futures 0.54%, S&P futures 0.42% & Nasdaq futures 0.12%
In Europe
FTSE 0.43% & DAX 0.69%
- US stocks inch higher after US-Japan trade deal
- Trade tariffs in focus ahead of August 1 deadline
- Tesla and Alphabet report after the close
- Oil falls for a third straight day
Trade deal & Magnificent Seven earnings start
Stocks are set to open higher on Wednesday after a new trade agreement between the US and Japan was announced, one of the most significant of the preliminary trade deals agreed so far. Optimism surrounding AI also helps sentiment as Magnificent 7 earnings kick off with Tesla and Alphabet.
US indices finished mixed yesterday as earnings were a mixed bag. Shares in GM dropped sharply after the carmaker was hit with $1 billion in costs related to Trump's tariffs. Meanwhile, the S&P 500 marked its 11th record high of 2025 yesterday, but the Nasdaq fell, and the Dow Jones has so far failed to reach record levels in 2025.
Trump now announced a massive deal with Japan involving 15% tariffs on imports from the Asian country. Japan is also set to open its market to trade in cars, trucks, rice, and other agricultural products.
The 15% tariff is lower than the 25% tariff initially outlined by Trump, and it removes some downside risks. However, the market is still keen for signs of a deal between the US and the EU, which have so far remained elusive.
Representatives from Washington and the EU entered negotiations with the hope of securing a breakthrough. The clock is ticking towards the August 1st deadline.
The US economic calendar is quiet today. Attention is turning to earnings from the magnificent 7, with both Tesla and Alphabet set to report after the bell.
Corporate news
Tesla is due to report after the close as the EV maker struggles with intensifying competition, which is affecting sales, and as the brand has been tarnished following Elon Musk’s foray into politics. Q2 deliveries fell 13%, and further issues may arise after Trump's signature fiscal bill is set to eliminate EV tax credits. However, optimism surrounding Tesla's robotics and autonomous driving plans could help the stock, which is down by over 12% so far this year.
Google parent Alphabet is due to report after the close, with the market watching its AI ambitions carefully. Earnings come as the share price is finally showing signs of life; investors hope that solid earnings could overshadow recent concerns over the antitrust ruling. Expectations are for net earnings of $2.18 a share on revenue of $80 billion, which would represent growth of 15% and 12%, respectively.
S&P 500 forecast – technical analysis
The S&P 500 has risen to above 6300 to fresh record highs. The price remains above its rising trendline, although the RSI is in overbought territory, so buyers should exercise caution. 6350 is the next logical level for bulls to target ahead of 6400. On the downside, immediate support is at 6300, and a fall below 6200 could open the door to 6150, the February high.
FX markets – USD flat, EUR/USD falls
The USD remains unchanged despite Trump announcing a trade agreement with Japan. Meanwhile, U.S. Treasury Secretary Scott Bessent also said that Federal Reserve Chair Jerome Powell shouldn't step down right now, although he did call for a review of the Fed's operations. His comments come as Trump remains disappointed that the Federal Reserve is slow to cut rates.
EUR/USD is falling despite a flat U.S. dollar, amid growing nerves surrounding a U.S.-EU trade deal as the August 10 deadline looms. Eurozone consumer confidence is due later today and will be the main release; however, the highlight will be tomorrow's ECB rate decision, where the central bank is expected to leave rates unchanged but could provide some clues about the bank's near-term policy plans.
GBP/USD is modestly higher in a quiet session. Industry data show the pay settlements and the private sector remained at 3% in the three months to June, presenting a pay cut and inflation-adjusted terms for many workers. The Bank of England continues to watch for signs of weakening inflationary pressures in the economy. The central bank is expected to cut rates in August.
Oil falls for a third straight day, Russia-Ukraine peace talks in focus
Oil prices are inching lower for a third consecutive day as investors weigh the latest U.S. trade deal developments alongside the start of peace talks between Russia and Ukraine.
The US announced a trade deal with Japan; however, the upside in oil has been limited, as the market awaits news on US and EU trade talks.
Meanwhile, peace talks between Russia and Ukraine are scheduled to take place today, although progress is expected to be slow and difficult. The latest round of talks follows Trump's threat to impose tariffs on buyers of Russian oil if Russia does not agree to a peace deal within 50 days.
Investors will be awaiting US EIA inventory data later today after figures from the API showed crude oil inventories fell again.
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