S&P500 Forecast :SPX unchanged after weaker retail sales ,Fed speakers are in focus

US futures

Dow future .00% at 38,785

S&P futures 0.04% at 5477

Nasdaq futures 0.23% at 19669

In Europe

FTSE 0.48% at 8183

Dax 0.20% at 18109

Retail sales show a slight cooling in consumption
The breadth of the rally to ATH’s is narrow
Oil holds steady near a monthly high

Retail sales show a slight cooling in consumption

U.S. stocks are holding steady in a quiet start after weaker than expected retail sales and ahead of a series of Fed speakers.

The bull run in the S&P500 is pausing for breath. It has been up nearly 15% so far this year and reached a fresh intraday high of 5488 in the previous session—marking its 30th record high this year. Optimism surrounding cooling inflation, a resilient economy, and the AI trade has helped the index reach lofty levels, although there are concerns over the breadth of the rally.

Tech companies ate the main driver behind the gains, which has also lifted the Nasdaq100 to ATHs, but the Dow Jones has lagged behind its peers. Most other sectors are not holding up as well.

Retail sales came in softer than expected, falling 0.1% month on month in May, below the 0.3% increase that was forecast. The April reading was also downwardly revised to 0.2%.

The data points to softer consumption, which comes amid high interest rates, a rise in unemployment, and consumer sentiment deteriorated.

The data supports a sooner move by the Federal Reserve to cut interest rates but comes after several Federal Reserve speakers have said that one interest rate cut this year appears appropriate. Overnight, Philadelphia Fed official Patrick Harper said he supported one rate cut this year, reiterating comments by Minneapolis Fed president Neel Kashkari at the weekend.

Attention will now turn to more Fed speakers who are due to speak and could provide more clarity over when the Federal Reserve will start cutting rates.

Corporate news

Lennar is set to open 2% lower after the home builder forecast third-quarter home deliveries below expectations. This is a sign that demand for new homes is likely to remain sluggish as mortgage rates remain at a 2-decade high.

GameStop is set to fall 2.6%, continuing its decline from yesterday's sharp losses. CEO Ryan Cohen told investors that the video game retailer plans to operate a smaller network of stores.

Tesla is set to fall 0.4% after the electric car maker initiated a legal battle for recognition of CEO Elon Musk's massive $56 billion pay package.

S&P 500 forecast – technical analysis.

The S&P 500 is hovering around a record high of 5483, reached yesterday. The RSI is in overbought territory, so buyers should be cautious. Buyers will look to rise to 5500 and beyond. Immediate support can be seen at 5400, ahead of 5330, last week’s low.

FX markets – USD rises, GBP/USD falls

The USD is rising after hawkish Fed commentary and despite weaker-than-expected retail sales. The market is looking to Fed speakers for further clues on when the central bank could cut rates.

EUR/USD is falling after mixed data from the eurozone. Germans' ZEW economic sentiment edged up to 47.5 in June, although this was weaker than the 50 expected. The disappointing figure is likely related to the stronger-than-expected inflation reading in May.

GBP/USD is edging lower after data showed that grocery price inflation cooled to 2.1% in the four weeks to June 9, down from 2.4%, marking the 16th straight monthly drop. The data comes ahead of tomorrow's inflation figures, which are supposed to cool to 2%, the BoE’s target level, and ahead of the BOE meeting on Thursday.

Oil holds steady near a monthly high.

Oil prices are holding steady near their monthly high, supported by risk sentiment in global markets and an upbeat oil demand outlook.

WTI crude is within a whisker of $80.00 a barrel, its highest level since late May, as equity markets reached fresh all on Monday.

The strength in the oil price comes from market speculation that the Federal Reserve will cut interest rates twice this year after a cooler-than-expected inflation report in May. A lower interest rate environment is positive for the demand outlook.

Oil gained yesterday, even though Chinese economic data for May missed forecasts, with the house price index falling as well as industrial production weaker than expected, although retail sales rose.

Finally, the start of the summer driving season is also keeping the mood upbeat toward oil prices, amid optimism of stronger fuel demand.

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