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12.05.2023 02:32 PM
US premarket on May 12: Investors remain optimistic

US stock index futures rose in morning trading after investors received another batch of excellent corporate reports and amid early signs of progress in raising the debt ceiling by American lawmakers. S&P 500 futures gained 0.3%, while the industrial NASDAQ added about 0.5%. The industrial Dow Jones only jumped 0.2%.

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It has been reported that President Joe Biden and House Speaker Kevin McCarthy postponed their scheduled meeting for today, which was directly related to the debt ceiling issue. Some experts note that this delay reflects progress in party-level discussions. Just yesterday, US Treasury Secretary Janet Yellen warned that a default could lead to an economic and financial catastrophe, once again emphasizing the need for a swift resolution to this issue.

Overall, the market situation remains quite tense due to mixed US economic data and ongoing concerns about the debt ceiling. Investors continue to focus on what major central banks will do next with their campaigns to raise interest rates. Yesterday's data showed that unemployment benefit claims reached their highest level since October 2021, while producer prices grew less than economists expected. This suggests that the Federal Reserve's policy tightening may finally be put on hold, especially since recent CPI data also indicated a slowdown in inflationary pressure.

If inflation continues to show signs of easing, it could raise hopes that the Federal Reserve's rate hike cycle is nearing an end, which would revive demand for riskier assets and help the stock market rally. Treasury yields were mostly higher.

Oil prices fell slightly amid subdued reports from China and the risk of lower demand. Bitcoin fell on concerns that a number of US cryptocurrency exchanges may face restrictions from the SEC.

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As for the S&P 500 index, demand remains and bulls have a good chance to continue the trend. Bulls need to keep the price above $4,116 and return it above $4,150 and $4,184. They also should push the index above $4,208 to reinforce a new bull market. If the trading instrument declines due to a lack of demand and the risk of continued high inflation in the US, bulls will have to prevent the price from falling below $4,116. Breaking through this level, the index may plummet to $4,091 and $4,064.

Jakub Novak,
Analytical expert of InstaForex
© 2007-2025
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