Will stock prices break to new highs? Futures suggest a strong open.
The S&P 500 gained 0.43% on Wednesday, following the Federal Reserve's interest rate decision and Chair Powell's press conference. News regarding AI chips exports lifted stocks in the final hour of trading, providing a boost to the market.
This morning, futures are up, with the S&P 500 expected to open 1.0% higher as investors react positively to President Trump's announcement of a major trade agreement with Britain. Nvidia stock is extending its gains in pre-market trading, further supporting the overall market sentiment.
U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer will meet their Chinese counterparts for trade talks in Switzerland this week, their respective offices announced on Tuesday evening.
The investor sentiment has improved, as shown in yesterday’s AAII Investor Sentiment Survey, which reported that 29.4% of individual investors are bullish, while 51.5% are bearish.
The S&P 500 trades within a short-term consolidation, likely a flat correction of the uptrend.
S&P 500 Futures Contract: Moving Sideways
This morning, the S&P 500 futures contract is trading significantly higher, buoyed by the positive trade developments.
The resistance remains around 5,700-5,720, while support is at 5,600, marked by the recent lows.
This sideways movement doesn't signal a weakness but rather a healthy ‘recalibration’ where early buyers take profits. These pauses often create good entry opportunities for those who missed the initial move, setting the stage for the next potential leg higher when the uptrend resumes.
Conclusion
The S&P 500 is expected to open higher this morning, nearing the key 5,700 level. The announcement of the US-UK trade deal and upcoming US-China talks has boosted sentiment, outweighing some of the cautionary notes from yesterday's Fed decision.
Here’s the breakdown:
- S&P 500 gained 0.43% on Wednesday after volatile trading following the Fed decision.
- Futures indicate a 1.0% higher open today as Trump announces a comprehensive trade deal with Britain.
- Tech stocks, led by Nvidia, continue to show strength on news about potential scaling back of AI chip export curbs.
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