• Big week for SPX500_m thanks to host of key risk events
• Watch out for US CPI, Fed speeches & big bank earnings
• SPX500_m bearish but RSI flirting around oversold territory
• Fresh fundamental spark could trigger big move
• Keep eye on strong support above 200-day SMA

Even as the countdown looms to the highly anticipated US jobs report this afternoon (Friday 6th October), investors are bracing for even more market volatility in the week ahead!

The incoming US inflation data, speeches from various Fed officials, FOMC minutes as well as earnings announcements by US banks could rock the S&P 500 next week.

Monday, October 9

• CNH: China aggregate financing, money supply, new yuan loans
• EUR: Germany industrial production
• USD: Fed Vice Chair Michael Barr, Dallas Fed President Lorie Logan, Fed Governor Philip Jefferson speech
• World Bank-IMF annual meetings open in Marrakech

Tuesday, October 10  

• AUD: Australia Westpac consumer confidence
• JPY: Japan balance of payments
• NZD: New Zealand home sales
• USD: Atlantic Fed President Raphael Bostic, Fed Governor Christopher Waller,  Minneapolis Fed President Neel Kashkari, San Francisco Fed President Mary Daly speech
• IMF issues its latest world economic outlook

Wednesday, October 11

• EUR: Germany CPI
• USD: FOMC minutes, PPI, Fed Governor Michelle Bowman, Atlanta Fed President Raphael Bostic speech

Thursday, October 12

• JPY: Japan machinery orders, PPI
• EUR: ECB September meeting minutes
• NZD: New Zealand food prices
• GBP: UK industrial production
• USD: US September CPI report, initial jobless claims, Atlanta Fed President Raphael Bostic speech

Friday, October 13

• CAD: Canada existing home sales
• CNH: China CPI, PPI, trade
• EUR: Eurozone industrial production
• USD: US University of Michigan consumer sentiment
• SPX500_m: Citigroup, JPMorgan, Wells Fargo, BlackRock results

The September US Consumer Price Index (CPI) report published on Thursday, October 12 will most likely influence expectations around whether the Fed hikes rates one more time in 2023.

Markets are forecasting:

• CPI year-on-year (September 2023 vs. September 2022) to cool 3.6% from 3.7% in the prior month.
• Core CPI year-on-year to cool 4.1% from 4.3% seen in August.
• CPI month-on-month (September 2023 vs August 2023) to cool 0.3% from 0.6% in the prior month.
• Core CPI month-on-month to remain unchanged at 0.3% from 0.3% seen in August.

Back in August, US headline inflation accelerated thanks to higher oil prices, but core inflation fell to the lowest level since September 2021. Should September’s CPI report show evidence of cooling prices, this is likely to boost bets around the Fed pausing hikes for the rest of 2023.

US CPI report may rock the SPX500_m…

The S&P 500 has a handful of tech stocks that remain sensitive to Fed hike expectations.

Given how tech stocks account for roughly 28% of the index’s value, the incoming CPI report could trigger volatility.

In a nutshell, tech stocks are pressured by higher interest rates because their value is based on earnings forecasted in the future.

• The SPX500_m is likely to trade lower if the inflation numbers are hot and sticky.
• Should the CPI report print below market forecasts, the SPX500_m may receive a boost higher.

US earnings season kicks off…

Third quarter earnings season kicks off on Friday 13th October, led by US banking giants JPMorgan, Citigroup, Wells Fargo and BlackRock. Investors will comb through the earnings for fresh insight into the health of US banks which can be used to gauge the health of the US economy.

When considering how financial stocks account for around 12.7% of the S&P 500, the market reaction to these big bank earnings on Friday is likely to impact the index.

• The SPX500_m could push higher if the bank earnings exceed forecasts.
• If the earnings disappoint, this could drag the SPX500_m lower

Conflicting technical signals 

The SPX500_m remains in a bearish trend on the daily charts as there have been consistently lower lows and lower highs. However, strong support can be found just above the 200-day SMA with the Relative Strength Index (RSI) flirting around oversold territory – suggesting a potential pullback down the road. These conflicting signals may keep the SPX500_m trapped within a range until a fresh fundamental catalyst triggers a breakout. In the meantime, support can be found at 4210 and resistance at 4332.

• A solid breakout above 4332 could open a path towards 4410 where the 100-day SMA resides.
• Should prices break below 4210, this could encourage a decline towards levels not seen since May at 4130.