The S&P 500 futures have declined by 1.4%
to 5,721 points this week, primarily due to concerns in the tech sector. The
sell-off began on Wednesday after Microsoft (MSFT) and Meta Platforms (META)
reported Q3 earnings that exceeded expectations but also indicated significant
increases in AI capital expenditures for 2025, which unsettled investors.
Consequently, the S&P 500 dropped by 1.8% to 5,704 points on Thursday. A
positive development came from Amazon (AMZN), whose strong earnings have
boosted premarket prices by 6.0% to $197.0, partially offsetting recent tech
sector fears. However, Apple (AAPL) fell short of consensus earnings per share,
partly due to a large fine paid to the European Union, pushing its shares down
by 1.0% to $223.5.
Despite the overall solid Q3 tech earnings,
S&P 500 recovery remains uncertain with the U.S. presidential elections
next week adding volatility. The SPDR S&P 500 ETF Trust (SPY) registered
$4.4 billion in outflows, as some large investors are closing long positions
made in mid-September, making the current rally less robust.
Attention is now shifting to macroeconomic
data. This week’s mixed figures—including weak September JOLTs, promising
October ADP Nonfarm Payrolls, softer-than-expected U.S. Q3 GDP, and a strong
September PCE index—paint an uncertain picture of the U.S. economy. The
upcoming Nonfarm Payrolls report is particularly crucial, with expectations
sharply down to 106,000 from 254,000, unemployment steady at 4.1%, and average
hourly earnings down to 0.3% month-on-month. Our estimates suggest Nonfarm
Payrolls between 140,000 and 230,000 and stable unemployment at 4.1%. These
figures will be critical in shaping economic and market sentiment ahead of the
elections.
From a technical
standpoint, the outlook for the S&P 500 index has worsened. The benchmark has
returned inside its initial target range of 5700-5800 points. To continue the
rally toward the 6100-6200 targets it needs to hold above 5820-5850 points. The
next resistance lies at 5910-5930 points, with support at 5720-5750 points.
In the commodities
market, Brent crude oil prices have almost recovered their 7% drop in the
beginning of the week. Iran has promised to strike back on Israel. The nearest
resistance is at $78.00-80.00, while the support is at $70.00-72.00 per barrel.
It is unlikely that prices would breach this range before elections in the U.S.
Gold prices have passed
the resistance at $2,710-$2,730 per troy ounce and opened a path towards
extreme targets of $2,800-2,820, with potential highs of $3,200-$3,300 per
ounce.
In the currency
market, the EURUSD is struggling to the upside. The pair rose by 0.7% to 1.08660,
signalling a potential correction of the Greenback. Nonfarm Payrolls data will
have a determining effect on its movement. If the pair accelerates to the
upside, it is likely to return to 1.10000-1.11000 range.