U.S. stock markets are poised for a muted start on Monday as investors brace for a pivotal week filled with major economic updates and earnings from leading technology firms. Meanwhile, developments on the trade policy front, particularly between the U.S. and China, continue to draw attention. Although equities climbed last week on hopes of easing tensions between the two economic giants, uncertainty still lingers. This week, attention will center on earnings from tech heavyweights, the U.S. GDP report, core PCE inflation data, and the crucial non-farm payrolls.

Futures Snapshot

• Dow Jones Futures: -0.35% at 40,260
• S&P 500 Futures: +0.1% at 5,530
• Nasdaq Futures: +0.08% at 19,411

European Markets

• FTSE 100: +0.3% at 8,437
• DAX 40: +0.69% at 22,399

Calm Before the Storm: Stocks Pause After Last Week’s Gains

Following a week of optimistic gains fueled by hopes of reduced trade tensions, U.S. stocks are starting the new week relatively flat. Investors remain cautious, digesting mixed signals about the status of trade discussions between Washington and Beijing. The ambiguity has left market participants grappling to understand the next steps in a trade saga that has significantly influenced global financial markets.

Looking ahead, investors face a crucial set of economic indicators: the U.S. GDP report, core PCE data a favored inflation gauge for the Federal Reserve and the monthly jobs report. These figures are expected to provide clearer insights into how tariffs and trade disruptions are impacting growth, inflation, and employment trends.

Additionally, earnings reports from four members of the “Magnificent Seven” tech group Microsoft, Amazon, Meta, and Apple will be closely analyzed, alongside updates from about 180 other S&P 500 companies.

Shifting Economic Landscape

This earnings season unfolds against a markedly different backdrop compared to the early days of Trump’s presidency when trade wars first rattled markets. Over $5.5 trillion in value has been wiped from the S&P 500 due to prolonged trade tensions. Although artificial intelligence once dominated headlines, concerns over trade policies have now taken precedence.

Several corporations have already flagged uncertainties stemming from the evolving trade landscape, with some companies revising their forecasts downward or withdrawing guidance altogether. Despite these headwinds, Q1 earnings have so far painted a relatively upbeat picture. Analysts now project S&P 500 earnings to climb by 9.7%, surpassing the 8% growth estimate recorded at the start of April.

Corporate Highlights

Boeing shares are rising about 2% following an upgrade from Bernstein analysts, who believe the aerospace giant is on track for a stronger recovery in 2023 after navigating recent scandals and operational hurdles.

On the other hand, Domino’s Pizza is experiencing a 3% decline after posting a mixed earnings report. The company reported earnings per share of $4.33 on $1.11 billion in revenue, missing analysts’ revenue expectations of $1.13 billion.

Technical Overview: S&P 500 Faces Key Resistance

The S&P 500 has recovered from lows near 5,100 but is now encountering resistance around the 5,500–5,505 zone. Bulls need to clear this barrier to push toward the 200-day simple moving average (SMA) near 5,750. If the index faces rejection here, a pullback toward 5,400 becomes possible, with further downside risk to 5,300. A decisive move below 5,150 would signal a new lower low and a potential shift in momentum.

Currency Market Update: Dollar Firms, Euro Slips

The U.S. dollar remains steady after modest gains last week, breaking a four-week losing streak. Renewed optimism about easing trade tensions has lent support to the greenback.

Meanwhile, the euro is losing ground, retreating from three-year highs. Growing expectations that the European Central Bank (ECB) may cut interest rates again in June are weighing on the currency. Data due this week is likely to show that Eurozone inflation is easing toward 2%, while economic growth remains sluggish at just 0.2%, strengthening the case for more ECB policy easing.

The British pound, however, is showing slight gains. With a light U.K. economic calendar, broader risk sentiment and U.S. dollar movements are likely to dictate GBP/USD’s direction this week.

Oil Prices Stabilize After Last Week’s Decline

Crude oil prices are holding steady as the new week begins, following a 2.5% slide last week. Investors continue to assess mixed signals on trade negotiations and weigh the possibility of increased output from OPEC+.

There are growing indications that OPEC+ may vote to expand oil production for a second consecutive month during their May 5 meeting, prioritizing market share over price stability. The uncertainty surrounding U.S.-China trade talks, along with possible changes in oil supply dynamics, will remain key factors influencing the oil market in the days ahead.