S&P 500 Forecast: SPX rises ahead of NFP report

US futures        

Dow futures -0.04% S&P futures 0.12%  & Nasdaq futures  0.53%

European futures

FTSE 0.01%,  DAX  0.36%

• US stocks mixed after Fed Waller’s comments & ahead of NFP
• Fed Governor Waller’s dovish remarks lowered September rate hike expectations
• NFP expected to show 56k vs -23k in July
• Oil eases but on track for a weekly rise

U.S. stocks head for modestly higher open as Waller calms rate hike fears

U.S. stocks are heading for a modestly higher open after Fed Governor Christopher Waller's words calmed inflation fears ahead of today's nonfarm payroll report.

Governor Christopher Waller noted that recent data points to some signs of disinflation and added that if upcoming reports supported that trend, then he would be in favour of leaving rates unchanged at the September policy meeting.

His comments saw the market quickly rein in rate hike expectations for September to 50%, down from 63% just a day ago.

Expectations had surged in recent sessions amid a global bond rout driven by long-dated yields, fuelled by concerns over stubborn inflation and swelling government debt, as well as geopolitical tensions.

This puts even more focus on today's nonfarm payroll report as well as next week's inflation figures.

Today's nonfarm payroll report is expected to show that 56,000 jobs were added in August after a shock fall of 23,000 in the previous month, as well as downward revisions in the two months prior to that.

The unemployment rate is expected to hold steady at 4.1%.

The market will be assessing the data to see whether recent weakness will be short-lived or whether the deterioration in the labour market is becoming more serious.

Weaker-than-expected jobs data could see the market lower rate hike expectations further for this month.

Should the NFP show more than 100,000 jobs were created, this could ramp up rate hike expectations, pushing Treasury yields higher and weighing on stocks.

Meanwhile, should the data come in line with expectations, investors could quickly turn their attention to next week's CPI inflation report, the next key release ahead of the FOMC meeting.

Corporate Movers

Lululemon is falling 17% after posting second-quarter results that beat earnings expectations but missed on revenue, while issuing another guidance cut that was significantly short of estimates.

AMC has jumped over 5% after the CEO slammed Robinhood over its stock tokens for AMC and others, calling it outrageous. The move has brought AMC back to the forefront of retail investors' minds.

Rare earth stocks are moving higher on reports that some Chinese firms halted U.S. shipments due to geopolitical concerns. U.S. rare earth and critical metals stocks are rising 4%.

S&P 500 forecast – technical analysis

The S&P 500 trades above its rising trend line, its 50 and 200 EMAs, maintaining a constructive outlook. The price ran into resistance at the record high of 7,810 and has since eased lower, but continues to hold above support at 7,615, the June high. Therefore, the uptrend remains intact.

Should support continue to hold, buyers will look to push towards 7,820, creating fresh record highs.

On the downside, a break below 7,615 is needed to expose the 50 EMA at 7,590 and the rising trend line support. Below here, attention will turn to 7,300, the July low, ahead of 7,230, the June low.

FX Markets – Dollar steady EUR/USD stabilises

The U.S. dollar fell yesterday following Christopher Waller's more dovish comments, which saw the market rein in September rate hike expectations. The mood is also cautious ahead of today's nonfarm payroll report.

EUR/USD has stabilised around 1.1600 on Friday as investors look cautiously ahead to today's nonfarm payroll report and next week's ECB rate decision. Markets are pricing in a 25-basis-point rate hike to 2.5%, whilst also assigning an almost 100% probability to another rate hike by June 2027. Germany factory orders rose 2.5% in July, exceeding expectations of a 0.3% gain.

GBP/USD is holding steady on Friday ahead of the U.S. nonfarm payroll report and after BoE Chief Economist Hugh Pill said raising rates now could help reduce the chances of more aggressive hikes in the future. The market is pricing in two rate hikes in the coming six months.

Oil rises as hostilities in the Middle East ramp up

Oil prices are easing moderately on Friday but are still set for a weekly gain as rising U.S.-Iran tensions raise concerns over Middle East supply.

Brent is on track to gain 6.5% this week, marking its largest weekly gain since August 17, while WTI is on track to climb almost 9% in its strongest weekly performance since July 13.

This week has seen the first clashes between the U.S. and Iran since July. At the same time, transit through the Strait of Hormuz remains restricted. Although flows haven't completely collapsed, the disruption has been enough to see the market reprice oil higher.

Four vessels transited the Strait of Hormuz on Thursday, down from nine a day earlier and a 10-day average of 15.

Citi has raised its average Brent crude price forecast for Q3 to $86 a barrel from $80, owing to the Strait of Hormuz remaining restricted.