S&P500 Forecast: SPX hits a record high, boosted by Nvidia earnings

US futures

Dow future 0.2% at 39,750

S&P futures 0.72% at 5345

Nasdaq futures 1.17% at 18929

In Europe

FTSE -0.02% at 8368

Dax 0.25% at 18720

• Nvidia earnings smash estimates fueling a chip & AI rally
• S&P500, Nasdaq100 reach a record high
• FOMC minutes were hawkish
• Oil steadies after 3-days of losses

Nvidia earnings smash estimates overshadowing hawkish FOMC minutes 

US stocks are pointing to record highs as Nvidia optimism offsets concerns over the Federal Reserve keeping interest rates high for longer.

The minutes of the latest FOMC meeting show that policymakers were concerned that inflation was not cooling as fast as anticipated, with some policymakers even prepared to raise interest rates further to cool inflation back to the target 2% level.

The meeting minutes came after a string of Federal Reserve officials this week warned that rates may need to stay high for longer owing to sticky inflation. While US CPI cooled in April for the first time this year, at 3.4%, it is still well above target.

Elsewhere, US jobless claims came in below expectations at 215k, down from 223k the previous week.

Looking ahead, attention will now turn to the PMI figures, which are expected to remain unchanged from April, at 51.3 for the services PMI and 50 for manufacturing. Stronger than forecast figures could raise further questions over the Fed’s ability to cut rates.

Corporate news

Nvidia is set to open 7% higher at a new record high after its earnings smashed analysts' expectations. Nvidia posted EPS of $6.12 on revenue of $26 billion, well ahead of forecasts of $5.60 and $24.6 billion, as profits and revenue surged 628% and 268% compared to the previous year. The company also announced a stock split of 10 for 1 on June 7th, which will take its share price from $950 to $95 while maintaining its total valuation.

The surge in Nvidia fueled optimism across global markets, helping the NASDAQ reach a record high. The impressive numbers and forecasts cemented investor optimism surrounding the rise of AI technology and suggest there's plenty more room for the AI rally to run.

Other chip stocks, such as Advanced Micro Devices Micron Technology, pushed higher, as did AI-related stocks, such as C3 AI and Super Micro Computers.

S&P 500 forecast – technical analysis.

The S&P 500 has risen to a fresh all-time high at 5350. The RSI is starting to tip into overbought territory. The next logical level is 5400. On the downside, a move below 5277 would negate the near-term uptrend. Below here, 5200 comes into play.

FX markets – USD falls, EUR/USD rises

The USD is falling after three days of gains as the upbeat market mood hurts demand for the safe-haven currency. However, losses could be limited amid hawkish Fed chatter.

EUR/USD is rising after business activity in the eurozone was stronger than expected. While the services PMI slipped modestly to 53.3, the manufacturing PMI posted a smaller-than-expected contraction. The data highlights the improving outlook in the region. Consumer confidence data is due shortly and is expected to improve.

GBP/USD is rising amid a weaker USD and as investors digest the news of a general election on July 4^th. Political uncertainty over the coming weeks could impact demand for sterling. Separately, US services PMI data came in weaker than expected, falling to 52.9 from 55, although manufacturing returned to growth.

Oil steadies after 3-days of losses

Oil prices are holding steady after three days of losses despite ongoing concerns over higher interest rates for longer in the US, which could hurt the oil demand outlook.

The minutes from the latest Federal Reserve meeting showed that the central bank discussed a possible rise in interest rates amid sticky inflation.

High interest rates for longer in the world's largest oil-consuming nation could slow economic growth and harm the demand outlook.

Meanwhile, US crude stockpiles rose by 1.8 million barrels last week, according to the EIA, higher than an expected 2.5 million barrel draw. Rising inventories point to tepid demand.

Meanwhile, on the supply side, the OPEC+ meeting is coming into focus ahead of the June 1st date meet, when the allies will decide on production levels.