S&P 500; US Indexes Fundamental Daily Forecast – Rising Crude Oil Prices Could Underpin Energy Sector

U.S. stock index futures are trading higher in reaction to firmer markets in Asia and Europe. Asian markets are trading slightly better in reaction to positive economic data out of China and Japan. European markets are following through to the upside after posting solid gains last quarter.

Helping to support the Asian stock indexes was a better-than-expected report from China. The Caixin Manufacturing PMI for the month of June came in at 50.4, above the 49.5 forecast. Manufacturing also hit a three-month high. This friendly news follows last Friday’s upbeat data which showed official manufacturing PMI rose to 51.7. This was higher than the 51.0 forecast.

In Japan, the Bank of Japan’s quarterly Tankan survey showed business confidence had improved. The Big Manufacturer’s Index registered a score of +17, compared with the forecast of +15.

In the U.S. today, investors will get the opportunity to react to several reports including Final Manufacturing PMI, ISM Manufacturing PMI, Construction Spending, ISM Manufacturing Prices and Total Vehicle Sales.

The major report is the ISM Manufacturing PMI. It is expected to come in at 55.0, up slightly from 54.9. A better than expected report should help boost Treasury yields which would put pressure on gold prices.

Look for volume to fall off after the release of the economic data because of the U.S. Fourth of July bank holiday on Tuesday. This could lead to a rangebound trade the rest of the session.

Volume may be below average all week because of Friday’s U.S. Non-Farm Payrolls. However, we could still see a volatile trade due to the thin trading conditions. Without the major players in the market, moves could be exaggerated to the upside and the downside.

Technology stocks should be watched closely. They were in focus during June due to aggressive sector rotation out popular stocks such as Facebook, Amazon, Apple, Netflix and Alphabet, Google’s parent.

The financial services sector could also be popular. This sector rose last week due to strong performances in banking stocks. They reacted to the positive outcome from the U.S. Federal Reserve’s bank stress tests.

Energy stocks may also be in play today in reaction to the seven day rally in crude oil prices. A rise in the energy sector would have a positive influence on the S&P 500 Index.