Stable U.S. Stock Futures Reach 15-Month Highs, Earnings Optimism Persists

U.S. stock futures remained relatively stable during Monday's overnight trading after a positive session among major indices. The Dow Jones Industrial Average, S&P 500, and Nasdaq all reached 15-month highs.

The major indices experienced gains, led by the technology and financial sectors, as investors eagerly awaited the release of quarterly results from Wall Street banks and other major corporations later in the week. The optimism surrounding corporate earnings expectations drove the rise in U.S. stocks. However, global shares and the dollar showed little change after data revealed slower-than-expected growth in the Chinese economy.

The U.S. economic data has consistently indicated a resilient economy, with cooling inflation and a strong labor market. Financials rallied more than 1% as investors anticipated positive signs of strength from banks, given the upcoming quarterly results from Bank of America, Morgan Stanley, and Goldman Sachs.

The sentiment surrounding major banks was boosted by better-than-expected quarterly results from JPMorgan Chase & Co and Wells Fargo. However, Citigroup fell short of analyst expectations. The broader technology sector also experienced a boost, with Apple Inc and semiconductor stocks, such as NVIDIA Corporation, pushing the sector higher. The optimism was driven by expectations surrounding upcoming tech earnings.

Market participants would also monitor key economic data, including retail sales, industrial production, business inventories, and the NAHB housing market index. Tuesday's retail sales data was expected to be the main focus for the week, although it was unlikely to significantly influence monetary policy or market direction.

The U.S. dollar struggled to recover after reaching more than one-year lows the previous week. The bearish sentiment surrounding the dollar was supported by growing expectations of a less hawkish Federal Reserve and optimism about a soft landing for the economy. The decline in the dollar coincided with a drop in Treasury yields, as investors speculated that the expected rate hike later in the month could be the final one for this cycle. The odds of a July rate hike were fully priced in, according to the Fed Rate Monitor Tool.

Overall, the combination of positive market performance, anticipation of strong corporate earnings, and a resilient US economy suggests a favorable outlook for US stock futures in the near term. Nonetheless, the persistence of elevated US dollar values and high policy interest rates may continue to exert a downward pressure on the overall surge in the stock market and the US economy, constraining their growth potential.

Data for Technical Analysis (5H) CFD US30 DJIA

Resistance : 34581.1, 34587.9, 34599.1

Support : 34558.7, 34551.9, 34540.7                       

5H Outlook

Source: Investing.com                               

Buy/Long 1 If the support at the price range 34548.7 - 34558.7 is touched, but the support at 34558.7 cannot be broken, the TP may be set around 34588.3 and the SL around 34543.0, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 34581.1 - 34591.1, TP may be set around 34605.0 and SL around 34553.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 34581.1 - 34591.1 is touched, but the resistance at 34581.1 cannot be broken, the TP may be set around 34558.7 and the SL around 34596.0, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 34548.7 - 34558.7, TP may be set around 34538.0 and SL around 34586.0, or up to the risk appetite.       

Pivot Points Jul 18, 2023 02:39AM GMT

Sources: Investing 1, Investing 2