S&P 500 futures drop ahead of opening bell on Monday – Crypto News

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• The S&P 500 lost 1.4% in the week ending June 23.
• Fed Chair Jerome Powell said two further rate hikes were likely in 2023.
• The market is focused on May PCE data out Friday that will signal US inflation’s direction.
• Nike releases fiscal fourth-quarter earnings in Thursday’s post-market.

The S&P 500 index declined 1.4% in the week ending June 23. The index has lost ground in four out of five of the last sessions, and the performance has lent credibility to the view that the S&P 500 is in for a midsummer downturn. The index gained for five straight weeks previously and had penetrated the overbought region of the Relative Strength Index (RSI), so it is somewhat surprising that a pullback would emerge.

Last Week Federal Reserve Chair Jerome Powell reiterated his belief in front of Congress that the central bank will enforce two further rate hikes this year. The announcement was a repetition of his remarks back on June 14, but it sent the market ducking for cover. The message was accentuated by rate hikes from the central banks of England, Switzerland, Norway and Turkey. These hikes in conjunction resurrected the storyline of a slowing global economy in the second half of the year.

Wall Street is expected to largely drift this week until Friday, when the US government’s Bureau of Economic Analysis (BEA) releases its Personal Consumption Expenditures (PCE) survey for May. The Fed’s favorite inflation gauge will give investors a better idea of ​​what to expect from the US central bank’s next FOMC decision on July 26. On the corporate side, one significant event for the week will be Nike (NKE) earnings on Thursday. The global, upmarket brand is viewed as a decent proxy for consumer spending, so expect other consumer cyclicals to trade directionally with Nike’s results.

At the time of writing in Monday’s premarket, S&P 500 futures are down 0.13%, while NASDAQ 100 futures have lost 0.17%.

S&P 500 News: May PCE, Michigan Consumer Sentiment Index lead data-heavy Friday

On Friday the Bureau of Economic Analysis, an agency within the US Department of Commerce, will release the PCE inflation data for May. The PCE is relevant since it offers up more specialized insights on the state of inflation and is treated more seriously than the Consumer Price Index (CPI) by Fed governors who decide interest rates. To compare the two to ’90s punk rock lore, the PCE represents the true punks of Rancid, while the CPI is a stand-in for the poseurs of Blink-182.

That said, early June’s CPI update witnessed a collapse from April’s 4.9% YoY headline to May’s 4% figure. True to form, analysts have not allowed the CPI data to sway them. The current forecast for core PCE inflation in May is 4.7% – the same as in April. Similarly, core May MoM PCE inflation is expected once again at 0.4%. A significant beat on either figure should lead to a rally on Friday, while higher inflation results will provide further fodder for a sell-off.

The Michigan Consumer Sentiment Index, released 90 minutes after the PCE on Friday, could aid the market. The preliminary reading of 63.9 roundly walloped the forecasts for 60. Once again analysts are holding consensus at 63.9, a fairly positive reading for consumer sentiment that has improved in the first half of the year.

The BEA will also release Personal Spending for May, which analysts believe will arrive at a subdued 0.2% MoM. The previous reading was 0.8% on a monthly basis.

Nike earnings has its fans and its detractors.

With much of the earnings calendar out of the way, the entire spotlight is on Nike, which will release fiscal Q4 earnings for the quarter ending in May on Thursday after the market close. Wall Street consensus predicts that GAAP earnings per share (EPS) of $0.68 will follow revenue of $12.59 billion.

There is no unanimity, however, on this quarter. Six analysts have raised their guidance on Nike over the past 90 days, while five have lowered their outlook. Nike’s share price will likely move according to guidance rather than earnings results though. Wells Fargo estimates that the resumption of student debt payments will cause US consumer spending to drop by $6 billion in September and thereafter. UBS analysts predict this will hurt clothing brands like Nike, in addition to Crocs (CROX), Foot Locker (FL) and Victoria’s Secret (VSCO).

It’s difficult to say how much an earnings beat will matter since consensus already points to a 32% decline from last Q4’s $1 in EPS. If earnings meets consensus, this will still be the fourth consecutive quarter that Nike has seen per share profits fall.

Earnings of the week

Monday, June 26 – Carnival (CCL)

Tuesday, June 27 – Walgreens Boots Alliance (WBA)

Wednesday, June 28 – Micron (MU), General Mills (GIS)

Thursday, June 29 – Nike (NKE), Paychex (PAYX), McCormick & Co. (MKC), Rite Aid (RAD)

Friday, June 30 – Constellation Brands (STZ)

What they said about the S&P 500 – David Bailin

David Bailin, Chief Investment Officer at Citi Global Wealth Investments, says the US economy is experiencing major pullbacks in some sectors while others flourish – a phenomenon he calls a “rolling recession”.

“Clearly commercial real estate is in recession. […] some of our manufacturing, basic consumer manufacturing is in recession right now.”

S&P 500 forecast

Last week’s pronounced pullback, which actually began on June 16, demonstrates a clear move toward taking profits. Just since March 13, the S&P 500 has moved from 3,835 to above 4,400. To many institutional investors, the market appears a bit pricey at a time when economic data is quite mixed, interest rates are expected to remain stubbornly high, and Russia experienced a surprising weekend coup threat.

The market looks aimed for the 4,325 level that acted as resistance back in August 2022. Already having broken below the 9-day moving average, a better point of support may be 4,300. This is where the 21-day moving average is approaching.

A break below 4,300 would mean a more serious pullback is in order. The index might then head to 4,200, where it found resistance in both February and May. The Moving Average Convergence Divergence (MACD) is poised for a crossover based on Friday’s close, so it would be unusual if traders did not position themselves for the possibility of a more severe downtrend.

s&p 500 daily chart