US Open: S&P 500 Forecast, Stocks Rise As Banking Fears Fade

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US stocks rise as banking fears fade further and as treasury yields slip. Attention starts to turn to Friday's inflation data.

US futures

Dow futures +0.77% at 32626

S&P futures +0.87% at 4007

Nasdaq futures +0.97% at 12735

In Europe

FTSE +0.87% at 77550

Dax +0.09% at 15285

  • Bank worries fade and treasury yields ease
  • US pending homes sales data is due
  • Micron Technology rises on upbeat guidance
  • Oil extends gains as inventories fall 

Treasury yields slip

US stocks pointing to a stronger start banking fears continue as investors look ahead to economic data which would gauge the path of future interest rates.

investors are increasingly convinced that the banking term more has been contained amid a lack of fresh signs of trouble in the sector since later backed sale of failed lenders SVB's assets. regional banks were all edging higher again today in cautious trade larger banks were also set to rise.

Treasury yields which had been pushing higher over the past two sessions what easing back today helping tech stocks and the Nasdaq higher.

There is a calmer feel to the market, at least for now attention is starting to turn to Friday's inflation data which could be the next key catalyst for markets.

According to the CME Fedwatch tool, the market is pricing in a 40% probability of a 25 basis point rate hike in May and a 60% probability that the US central bank will keep interest rates on hold.

The main release on the US economic docket today is US pending home sales which are expected to fall 3% MoM in February, after rising 8.1% in January.

Corporate news

Lululemon jumps 16% pre-trade after forecasts. The athleisure clothes retailer posted an EPS of $4.40 ahead of the $4.26 forecast. Revenue came in at $2.77 billion, besting the $2.7 billion expected.

Micron Technology rises pre-market despite reporting its largest-ever quarterly loss. However, management has raised guidance for the current quarter, expecting the inventory glut to be worked through.

Apple falls after unveiling its buy now, pay later service in the US as the tech giant continues to expand into finance.

Where next for the S&P500?

The S&P500 rebounded off support at 3630 and has been trending higher, pushing above the year-old falling trendline, the 200 & 100 sma. This combined with the RSI above 50 keeps buyers optimistic of further gains. Buyers could look for a rise over the 50 sma at 4022 to extend gains towards 4075, the March high. Failure to hold above the 100 sma at 3975 could see the price test the 200 sma at 3940. A fall below here negates the near-term uptrend. A fall below 3907 creates a lower low.

(Click on image to enlarge)

spx chart

FX markets – USD flat, EUR rises

The USD is holding steady against its major peers as investors continued to weigh up the stronger-than-expected consumer confidence against doubts over the Fed’s next steps for interest rates. The market is still pricing in 2 rate cuts by the end of the year.

EUR/USD is rising boosted by stronger-than-expected German GFK consumer sentiment data which rose to -29.5, up from -30.6 in March. German inflation data is due tomorrow. Broadly speaking the euro is also benefiting from expectations that the ECB will continue to hike rates whilst there are doubts over the Fed’s next move.

GBP/USD is holding steady above 123 but lacks and fresh catalyst to move higher. earlier this week they just showed that UK food inflation had risen to a record high. Today, however, British retailer bellwether Next said that it expected price growth to slow significantly in H2.

EUR/USD +0.16% at 1.0845

GBP/USD -0.03% at 1.2323

Oil rises ahead of inventory data

Oil prices are rising for a third straight day as supply concerns remain and as oil inventories unexpectedly drop.

Well, the evaporating banking sector fears are helping the demand outlook for oil supply remains under pressure as a dispute between Turkey and Iraq remains unresolved. The output of around 400k bpd is being affected and keeps oil prices supported.

Attention it is now turning to EIA inventory data which comes after API stockpiles recorded a draw of 6.1 million barrels, the largest draw this year.

WTI crude trades +0.62% at $74.00

Brent trades at +0.56% at $78.80

Looking ahead

15:30 EIA oil inventory data

15:00 US consumer confidence

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