S&P500 futures are up 0.3%, while NASDAQ shows a gain of 0.4%. The start of the earnings season has been weaker than in previous quarters, with only the largest companies showing high profits. According to Morgan Stanley, companies are taking a more cautious tone in their forecasts, and mentions of weaker demand are at record levels. Disappointing reports from Netflix Inc. and Tesla Inc. have led to a significant correction in the Nasdaq 100, raising the possibility of continued pressure on the index.
The gloomy reports contrast with signs of the US economy's resilience, raising doubts about the central bank's ability to declare victory in its battle against inflation and taper interest rate hikes as early as this autumn. An unexpected drop in US unemployment claims has increased the likelihood of further rate hikes after the Fed's meeting next week despite rumors earlier this week suggesting the FOMC might refrain from making changes to the key rate at the upcoming meeting.
The British pound rose after the release of UK retail sales data, the US dollar index continued to rise, and Treasury bond yields remained mostly unchanged. According to ONS data, retail sales grew by 0.7% last month but fell by 1.0% after a 0.1% increase in May. Economists had predicted a 0.2% monthly growth.
Oil is set to show its fourth weekly increase, while gold retreated from a two-month high due to the recent strengthening of the US currencies.
As for the S&P 500 index, demand for the trading instrument remains strong. Bulls have a chance to continue the uptrend, but they need to settle above $4,557 and $4,582. A breakthrough from this level could lead to a surge to $4,609. A no less important task for bulls will be to maintain control over $4,637, which will strengthen the bull market. In case of a downward movement due to reduced risk appetite, bulls should protect $4,539. A breakdown of this level may push the trading instrument back to $4,515 and $4,488.