S&P 500 Fundamental Forecast – May 25, 2016

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Published: May 24, 2016, 10:40 UTC

The S&P 500 is set to open in the red as the dollar rallies on more Federal Reserve comments about a rate increase in the near term. The index is

S&P 500 Fundamental Forecast – May 25, 2016

The S&P 500 is set to open in the red as the dollar rallies on more Federal Reserve comments about a rate increase in the near term. The index is trading at 2048.04 down 4 points while the DAX rallied on the weaker euro after the German ZEW missed expectations but better than expected German data yesterday continues to support stocks. The DAX is trading at 9927.50.

The timing of future Fed rate hikes in the face of a sluggish economy is a major focus among stock investors who have benefited from historically low borrowing costs since the 2008 financial crisis.

The Dow Jones industrial average and the Nasdaq Composite traded higher for much of the session but they made a pronounced dip in the final few minutes.

San Francisco Fed President John Williams and his St. Louis counterpart, James Bullard, both struck hawkish tones in separate appearances on Monday.

Last week, investors were surprised at central bank minutes that opened the door to a rate hike as soon as June. Investors will listen for fresh clues to the Fed’s intentions when Chair Janet Yellen speaks on Friday.

“The market needs to be coddled and gently eased into a slightly higher interest-rate environment, and that appears to be what the Fed is doing,” said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

Tightening borrowing costs would help choke inflation but also hamper economic expansion and reduce liquidity in stock markets, which could impede stock gains.

The S&P 500 is trading at about 16.4 times expected earnings, down from about 17 at the start of May, according to Thomson Reuters Datastream.

FxEmpire provides in-depth analysis for each asset we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole. Please click on the links to find the most recent reports for this asset.

Upcoming Economic Events that you should be monitoring:

Wednesday, May 25, 2016

Cur.	Event	Actual	Forecast	Previous
USD	API Weekly Crude Oil Stock			-1.140M
NZD	Trade Balance (YoY) (Apr)		-3,940M	-3,380M
NZD	Trade Balance (MoM) (Apr)		60M	117M
AUD	Construction Work Done (QoQ) (Q1)		-1.5%	-3.6%
EUR	EU Finance Ministers Meeting
USD	Goods Trade Balance (Apr)		-60.10B	-56.90B
USD	FOMC Member Harker Speaks
USD	Services PMI (May)		53.1	52.8
CAD	Interest Rate Decision		0.50%	0.50%
USD	Crude Oil Inventories			1.310M
USD	FOMC Member Kashkari Speaks
USD	FOMC Member Kaplan Speaks