The S&P 500 futures remain neutral this week
at 5871 points after last week’s 2.1% decline, the largest pullback since early
September. The market's tone remains cautious, weighed down by Federal Reserve
Chair Jerome Powell's hawkish rhetoric, rising inflation, and robust October
retail sales data. Powell's comments that the Fed sees no urgency to lower
interest rates further dampened sentiment, as investors had hoped for a faster
pace of rate cuts. While the stock market retains some upside potential,
sustained economic growth is essential to fuel further gains.
A key focus this week will be NVidia's (NVDA)
earnings report after hours on Wednesday. Analysts expect Q3 2024 revenue to
rise by 80% year-over-year. Surpassing this forecast could provide a
significant boost to the S&P 500, potentially targeting 6000-6150 points.
Conversely, any shortfall could lead to a sharp correction, driving the index
down to 5550-5650 points—a 4-5% decline.
Additionally, the release of November
Manufacturing and Services PMIs on Friday will shape market expectations.
Manufacturing PMI is projected to decrease slightly to 48.0 from 48.5, while
Services PMI is forecasted to hold steady at 55.0. Deviations from these
estimates could positively impact sentiment: weaker readings might accelerate
rate cut expectations, while stronger data could reaffirm economic resilience.
Investor sentiment remains resilient, as
evidenced by continued buying of market dips. The SPDR S&P 500 ETF Trust
(SPY) reported $3.0 billion in net inflows this week, following $9.7 billion
the previous week. Despite Powell's hawkish stance, large investors seem
undeterred in their bullish outlook.
From a technical perspective, the S&P
500’s outlook has weakened. The index surpassed initial targets at 5700-5800
and began a rally toward the 6100-6200 range but failed to break resistance at
6010-6030. It has since retreated to the 5850-5870 support zone, with the
all-time high set at 6026 points.
In commodities, Brent crude prices remain
under pressure, hovering around $71.50 per barrel after Donald Trump's election
victory. The nearest resistance is at $78.00-80.00, with strong support at
$69.00-71.00. Market participants are closely watching Trump's next moves,
which could influence the balance between supply and demand.
Gold prices have retreated sharply, down 6.5%
to $2,569 per troy ounce, following the U.S. elections. This level sits at the
bottom of the $2,560-2,580 support range. A further decline could trigger a
bearish reversal, while a recovery above $2,710-2,730 could reignite the rally
toward $2,870-2,890, with possible highs of $3,200-$3,300.
In the currency market, the U.S. Dollar has
stabilized, weakening slightly by 0.2%, with EUR/USD trading at 1.05500.
Although oversold conditions persist, the Dollar's dominance remains intact.
Macroeconomic forecasts this week point to a possible corrective rally for the
Euro, supported by anticipated data releases.