Stock Futures Rise Ahead of Earnings Surge and Fed Chair's Remarks Amid Political Uncertainty

U.S. stock futures stabilized on Sunday amid speculation about the impact of an assassination attempt on presidential candidate Donald Trump. Futures rose on Monday ahead of a busy week of corporate earnings and remarks from Fed Chair Jerome Powell. Political uncertainty tempered risk appetite despite optimism over earnings. Trump is expected to speak at the Republican convention as the frontrunner. Analysts suggest monitoring AI sector sales revisions to assess its sustainability amidst investment scrutiny and varied performance across different phases.

BCA Research challenges market expectations that a second term for President Trump would lead to further corporate tax cuts, suggesting instead that he may increase taxes via higher tariffs. They argue that significant corporate tax reductions are unlikely due to high bond yields, a large budget deficit, and fiscal sustainability concerns. BCA Research warns that Trump's policies, including higher tariffs and reduced immigration, could temporarily increase inflation but dampen long-term economic growth.

UBS analysts downgraded Tesla from Neutral to Sell, while increasing their price target, citing concerns over Tesla's valuation amidst expectations for growth in AI. They acknowledged positive developments in Tesla's Energy and Full Self-Driving segments but cautioned that expectations for its core auto business are declining. UBS highlighted uncertainties in valuing Tesla's potential growth areas and warned of downside risk if enthusiasm for AI diminishes.

Bank of America raised its price target for Apple, citing confidence in a multi-year iPhone upgrade cycle driven by new AI features. They noted strong intentions among iPhone users to upgrade, supported by recent developments at Apple's Worldwide Developers Conference and robust services growth.

Nomura downgraded Super Micro Computer due to limited upside potential, citing uncertainties around supply issues and GPU transitions affecting sales expectations in the AI server market.

Morgan Stanley highlighted Microsoft's leadership in GenAI, noting significant IT share gains driven by strong core spending intentions and Azure Cloud growth. They emphasized CIO optimism towards Microsoft's Generative AI products, particularly Microsoft 365 Copilot and Azure OpenAI Services.

The U.S. quarterly earnings season continues this week, starting with Goldman Sachs and BlackRock reporting on Monday, followed by Bank of America, Morgan Stanley, ASML, and Netflix later in the week. Analysts anticipate strong results, with S&P 500 companies expected to show a 10.1% year-over-year earnings growth in Q2, driven by tech and optimism in artificial intelligence. Investors are watching closely to see if these results can sustain or boost the already record-high stock indices.

Meanwhile, Fed Chair Jerome Powell's upcoming remarks at the Economic Club of Washington DC are awaited for insights into potential interest rate cuts in September. In political news, the 2024 Republican National Convention begins with Donald Trump expected to secure his party's nomination following an attempted assassination, which analysts speculate may bolster his chances against President Joe Biden.

Data for Technical Analysis (1H) CFD US 500 [S&P 500]

Resistance : 5637.1, 5638.3, 5640.3

Support : 5633.1, 5631.9, 5629.9                             

1H Outlook

Source: TradingView                                                   

Buy/Long 1 If the support at the price range 5628.1 - 5633.1 is touched, but the support at 5633.1 cannot be broken, the TP may be set around 5638.6 and the SL around 5626.0, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 5637.1 - 5642.1, TP may be set around 5652.0 and SL around 5631.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 5637.1 - 5642.1 is touched, but the resistance at 5653.0 cannot be broken, the TP may be set around 5633.1 and the SL around 5644.0, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 5628.1 - 5633.1, TP may be set around 5615.0 and SL around 5639.0, or up to the risk appetite.       

Pivot Points Jul 15, 2024 09:03AM GMT