S&P 500 Forecast: Stock Market Braces for Fed Decision and Earnings

Big Tech Earnings and the Fed Make This the Most Important Day of the Week

Futures are marginally higher in the premarket and the tone is cautious. S&P 500 and Dow futures are barely moving. Nasdaq 100 futures are leading and that tells you exactly where the focus is this morning. Four of the Magnificent Seven report after the close and traders are not making big moves until they see those numbers.

Bears Waiting for Closing Price Reversal Top Confirmation

June E-mini S&P 500 Index futures are inching a little higher after posting a potentially bearish closing price reversal top the previous session.

The set-up is pretty simple. A trade through 7146.25 confirms the chart pattern. This could trigger the start of a 2 to 3 day correction with 6995.25 to 6941.25 the first important downside target. Additional support could also be provided by an uptrending Gann angle at 6989.00.

A trade through the record high at 7223.25 will negate the chart pattern and reaffirm the uptrend.

Traders should also monitor the reaction at the minor bottom at 7079.25. Taking out this level will shift momentum before the anticipated big break.

What the Market Needs From Big Tech

Alphabet, Amazon, Meta Platforms, and Microsoft all report today. The bar is high and it has been for a while. I’ve watched this setup play out before. Capital expenditure commitments from last quarter were enormous and the question now is whether the revenue is following the spending.

Artificial intelligence investment is the story every analyst is watching. If guidance on that spending holds and revenue backs it up, the Nasdaq has room to run. If any one of those four disappoints on guidance, the selling we saw in the prior session looks like a warm-up.

Premarket Movers Setting the Tone

Starbucks is higher after raising its full-year outlook and that is helping sentiment in consumer names this morning. Robinhood is under pressure after missing earnings, which points to softer retail activity and is worth watching as a signal.

Seagate Technology and NXP Semiconductors are both sharply higher on strong results and upbeat guidance. When semiconductor names move like that before the open, it lifts the whole sector and gives the Nasdaq something to lean on.

Oil Is Complicating Everything

June WTI crude oil is hovering near $100 a barrel. Spot Brent crude oil is above $114. Gasoline prices are climbing again and energy costs running this hot do not stay contained. They run through margins, through consumer spending, and straight into the inflation data the Fed is watching. This is not a background story today. Oil is sitting in the middle of the rate outlook and the rate outlook is sitting in the middle of every earnings call happening this week.

Powell’s Last Meeting and What Comes After

The Fed holds today. That is fully priced and there is no mystery about it. Inflation is still above target and the labor market is not weak enough to force a move. The vote will be nearly unanimous. What I am watching is the language.

This is almost certainly Jerome Powell’s final meeting as Fed chair. Kevin Warsh takes over next and he leans toward cuts, but he inherits an inflation problem that oil is making harder by the day. The rate cut trade is not as clean as it looked three months ago and Powell’s press conference will remind the market of that.

What I’m Watching

Two catalysts drive this market today and both land after the open. The Fed speaks this afternoon and four major tech names report after the close. Futures are telling you traders want to see both before committing. The setup is cautious and volatility is coming.

More Information in our Economic Calendar.