S&P 500; US Indexes Fundamental Daily Forecast – U.S. Investors Optimistic About Earnings

U.S. stock indexes futures are trading flat shortly before the cash market opening. September E-mini NASDAQ-100 Index futures reached a new contract high earlier in the session, but the market has since retreated back to unchanged. The price action is understandable since we are in a news driven market. I don’t think the major players want to commit to the long side just yet until they start to see a few earnings report.

Based on last week’s price action, investors seem to be convinced the Fed will maintain the low interest rate environment for longer-than-expected. This should continue to underpin prices with a few stops and starts in between as investors react to fresh economic data from time to time and statements from Federal Reserve officials.

Investors are optimistic about second-quarter earnings so any surprises will be to the downside.

In other news, the markets in Asia closed mixed on Monday following the release of better-than-expected China second-quarter GDP. Japanese markets were closed for Marine Day which could’ve let to the lackluster trade.

China second-quarter GDP rose 6.9 percent on year, better than the 6.8 percent forecast. The Chinese government’s target for annual GDP this year is 6.5 percent. Despite the positive news, Chinese stock markets closed lower. This may mean investors are still concerned about a possible slowdown in the economy due to concerns over high debt levels.

Ahead of the U.S. opening, European exchanges edged higher as investors had a more positive reaction to the GDP report from China. Additionally, investors seemed to be optimistic at the start of the second round of formal Brexit talks in Brussels.

Forecast

Today’s price action is likely to be driven by two factors:  U.S. Treasury yields and earnings. At times, last week, the stock market seemed to tick higher each time bond yields went down. We could continue to see this relationship today.

All eyes will be on Netflix today. The video streaming giant is set to release its second-quarter fiscal 2017 earnings results after the bell on Monday. Traders are looking for earnings of $0.16 per share and revenue of $2.76 billion, which would represent year-over-year growth rates of 74% and 31%, respectively.

Since Netflix is a so-called FANG stock. Traders will also be watching Facebook, Apple, Amazon and Alphabet (Google’s parent). Since they are all NASDAQ stocks, I think the Composite and the -100 Index will be the leader today.

Goldman Sachs reports on Tuesday so banking or financial services stocks may also be in focus. Rising crude oil futures could also help the energy sector.