All eyes on US inflation
S&P500 => The index rises back over 4000
Disney => The stock trades at a 21-month low
Oil => The commodity rises over $100
S&P rises ahead of US inflation
The rollercoaster on Wall Street continued last night, with stocks rebounding modestly ahead of key US economic data.
While selling ease, sentiment remains fragile amid concerns that the Fed could struggle to raise interest rates sufficiently without choking economic growth. The index closed below 4000 for a second straight session.
Today, risk sentiment is attempting to improve with inflation data in focus. Chinese inflation was higher than forecast at 2.1% annually, amid lockdowns and disrupted supply chains. However, expectations are building that US consumer prices could start to fall in April for the first time since August 2021.
The data is likely to set the tone for stock markets over the coming week. Slowing inflation could see stocks rally.
|US CPI April YoY||Expected: 8.1% (0.4%)||Previous: 8.5%|
Where next for the S&P500?
The S&P ran into resistance at 4630 at the end of March and has been trending lower since breaking below its 20 & 50 sma.
The 20 SMA crossing below the 50 and the RSI in negative territory suggests that there could be more downside on the cards.
Sellers will need to break below 3960 2022 low to continue the bearish trend and look to 3940 falling trendline support. Buyers could aim to move over 4060, the May 2 low ahead of 4100. It would take a move over 4145 to negate the near-term downtrend.
Disney is due to report earnings today, and Wall Street expects to see a 29% YoY increase in revenue to $20.12 billion.
Meanwhile, adjusted EPS is expected to surge 49% to $1.18. The rebound in earnings is mainly owing to the recovery in the theme parks and resorts business post-pandemic.
The streaming service Disney+ is expected to have added 4.3 million subscribers, a marked improvement on Netflix’s appalling subscriber numbers earlier in the month. Disney+ even expects subscriber numbers to rise in the second half of the year owing to its strong content slate.
Oil rises after steep losses.
Oil prices are bouncing after steep losses but still trade 8% lower this week as demand concerns dominated.
Demand concerns have been the key driving force as China shows no signs of ending its zero-COVID policy as recession risks grow. This, combined with the USD trading around a 20-year high and the fact that the EU is struggling to push through the proposed ban on Russian oil, keeps oil prices around the $100 psychological level.
Oil inventories unexpectedly rise by 1.6 million barrels, exasperating concerns over a slowdown in demand. EIA stockpile data is due later today.
Support can be found at 97.80 (today’s low) and 94.70 (April 26 low).
Resistance for the stock can be seen at 104.30 (50 sma) and 110.80 (May high).