S&P 500 broad market index futures are up
by 0.63% to 6,050 points on Monday, rebounding from last Friday’s unexpected
panic following the release of U.S. PMI data. Manufacturing PMI increased to
51.6 points from 51.2, while Services PMI dropped into contraction territory at
49.7 points from 52.9. The benchmark fell by 1.75% to 6,008 points on the news.
This time, market participants ignored the
“worse-is-better” principle, as economic cooling was overshadowed by recession
risks, the Federal Reserve’s hawkish stance, persistent inflation concerns, and
fears of economic damage from President Donald Trump's ongoing tariff wars. The
situation was further aggravated by Walmart’s (WMT) weak forward guidance last
Thursday.
Fortunately, no negative headlines emerged
from Trump over the weekend, preventing additional downward pressure. Investors
are now looking for positive catalysts to sustain the stock market rally. This
week, Nvidia will release its Q4 2024 earnings, the second estimate for U.S. Q4
2024 GDP will be published, and the PCE index report will close the week on
Friday. Nvidia must meet market expectations of a 63% QoQ EPS increase and a
73.0% QoQ revenue surge. Any weak forward guidance, particularly considering
DeepSeek’s competitive threats, could trigger a sharp selloff. The U.S. Q4 GDP
must remain at least neutral around 2.3% QoQ to ease recession fears, while the
Core PCE Index, excluding food and energy, is expected to decline to 2.6% YoY.
If these expectations are met, the S&P 500
is likely to resume its upward trajectory towards 6,150–6,250 points, testing
resistance. Otherwise, the index may enter a correction or struggle to maintain
moderate gains.
Large investors remain cautious. The SPDR
S&P 500 ETF Trust (SPY) recorded net inflows of just $280.2 million last
week, excluding Friday. The sharp decline on Friday could further reduce this
figure, potentially reversing it into net outflows, which would add further pressure
on the stock market.
The technical outlook for the S&P 500
remains unchanged. The index is in an upward formation, with primary targets at
6,150–6,250 points and extreme targets at 6,650–6,750 points. The nearest
resistance is at 6,130–6,150 points, while a decisive break above 6,250 could
drive the index toward its extreme targets.
In commodities, Brent crude remains in a
downtrend, trading at $74.30 per barrel, with downside targets at $68.00–70.00
and resistance at $78.00–80.00. Prices continue to fluctuate within the broad
$70.00–80.00 range, with traders hesitant to bet on further declines, while
upside potential remains limited.
Gold prices are hovering around $2,940 per
troy ounce after breaking past the $2,850–2,880 resistance zone. The new
all-time high now stands at $2,954 per ounce. The rally appears to be losing
momentum, with the next target at $2,940–2,960 per ounce and extreme targets at
$3,200–3,300. The upside scenario will be invalidated if prices fall below
$2,800.
In currency markets, the U.S. Dollar has
stabilized, with EURUSD at 1.04720. A sustained move above 1.05700 could push
the pair toward 1.09500–1.10500, while for a downside scenario, EURUSD must
remain below 1.04700.