S&P500 and Nasdaq Composite: Investors Eye Breakout on Lower Oil and Earnings Boost

S&P 500 Futures Bounce Back on Earnings and Oil Pullback

June E-mini S&P 500 Index futures are edging higher shortly before the opening on Thursday. The price action indicates a complete recovery from yesterday’s setback that was likely fueled by uncertainty over the direction of the Fed and several major earnings reports after the close.

Although Tuesday’s closing price reversal top was confirmed on Wednesday, there wasn’t enough follow-through selling to give me the type of break I was expecting. Today’s strong early price action has now put the market back in a position to challenge the record high at 7223.25.

A trade through 7223.25 will negate the closing price reversal top and signal a resumption of the uptrend. On the flipside, a sustained move under the pivot at 7151.25 will signal renewed selling pressure. This could trigger a further break into the support cluster at 7079.25 to 7079.00. Watch for a technical bounce on the first test of this area.

If 7079.25 is taken out with conviction, we could see an acceleration to the downside with the retracement zone at 6995.25 to 6941.25 the next major downside target.

There is no resistance over 7223.25 so we’re not going to try to pick a top. But if another reversal forms then we’ll be watching again for an even stronger confirmation.

Earnings and Oil Are Running This Market This Morning

The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average are all pointing higher in the premarket and the two drivers are straightforward. Earnings are coming in better than feared in several key names and June WTI crude oil and Spot Brent crude oil are both pulling back from recent highs. That combination is exactly what this market needed after Wednesday’s session.

Oil Pulling Back but the Trend Is Still Firm

June WTI crude oil and Spot Brent crude oil pulled back from recent highs this morning and I felt it in the futures immediately. That is how tight this relationship has gotten. Oil eases a dollar or two and equities find room. I’ve watched it play out every session this week. The pullback is real but the trend has not broken. Elevated crude is still the baseline and every earnings call and every Fed meeting this week has oil sitting in the background of it.

Earnings Strength Meets Weak Guidance

Caterpillar is higher after a solid quarter and raised guidance. When a company that sells heavy equipment to mines and construction sites lifts its outlook, I pay attention. That is not a financial story. That is a demand story. Amazon is gaining this morning after the initial post-earnings drop. The market took another look at those numbers overnight and liked what it saw.

Meta Platforms is still under pressure. Higher spending, light user growth, and management explanations that did not satisfy anyone. Microsoft is slipping despite a beat. The cost of expansion is what traders are focused on, not the revenue line. The bar has moved. Guidance and spending discipline are what get rewarded now and not every name on the board is clearing it.

The Fed Is Still in the Room

The Fed held Wednesday and the message was not dovish. Rate cuts are not getting closer and the language did not suggest otherwise. That puts a ceiling on buyer aggression even when earnings are coming in strong. I’ve seen this before. Good results plus a patient Fed equals a market that grinds rather than runs. That is exactly the setup heading into Thursday’s open.

What to Watch

The E-mini S&P 500 Index futures contract record high at 7223.25 is the level that matters today. A trade through it and the closing price reversal top from Tuesday is off the table. The uptrend resumes and buyers get confirmation they have been waiting for. A failure to clear it and the market starts building a case for another test of support. Earnings and oil are both moving in the right direction this morning. The question is whether they move enough to push June E-mini S&P 500 Index futures through that level before the close.

More Information in our Economic Calendar.