U.S. Stocks Set To Open Lower Despite OPEC+ Deal

The First Week Of The Earnings Season Begins

S&P 500 futures are off lows but still point to a lower open as the market prepares for the first week of the earnings season. This is a week when many banks report their results, so market participants will eagerly listen to executives’ comments regarding COVID-19 impact on the banking industry.

No economic data releases are scheduled for today, but the week will be interesting as Retail Sales will be reported on Wednesday and Initial Jobless Claims are due on Thursday.

Currently, analysts expect that Retail Sales will decline by 7%, following a decline of 0.5% in the previous month. The pace of new applications for unemployment benefits is expected to slow down, and the consensus calls for 4.6 million Initial Jobless Claims compared to 6.6 million in the previous week.

OPEC+ Reached A Deal

OPEC+ countries managed to reach a deal to cut production by 9.7 million barrels per day (bpd). It is also expected that major oil producers outside OPEC+ (U.S., Canada, Norway, Brazil, Indonesia) will cut production by 4 million – 5 million bpd.

However, concerns about the hit to demand continue to put pressure on oil prices, and oil is roughly flat on Monday despite the historic production cut deal.

It remains to be seen whether the production cut deal will be sufficient enough to support oil prices in the near term since it begins in May, while the biggest hit to demand is expected in April.

Will Stimulus Measures Push Stocks To New Highs?

The main question of this week is whether the unprecedented stimulus measures that were announced in recent weeks will be sufficient enough to push the stocks even higher from current levels.

The upcoming economic data is guaranteed to be grim. However, the market has previously shown that it is able to shrug off the negative economic data if it believes that more stimulus measures are around the corner.

The earnings season will be a major test for the market since it will have to deal with poor earnings and downside guidance. If the market is able to stay near current levels after the earnings season, it will have good chances to continue the upside move.