Indices Weekly Outlook

Concerns about a deteriorating growth outlook amid trade war risks means the S&P 500 outlook is remaining not so certain. Another choppy week could be ahead of us, as attention turn to more company earnings.

It was the most brutal week for stocks in five years and this time, there was no Fed-speak coming in to save the day.

It was Wall Street that faced the worst of Friday’s sell-off. Notably, the dollar—traditionally a haven during market turmoil—failed to stage a rally, instead tumbling as investors sought refuge in gold, the yen, and the euro. The trend suggests that confidence in the US economy is beginning to fray, with Trump’s protectionist stance raising concerns over the long-term stability of America’s growth engine.

A brutal week saw a strong Friday bounce, but there’s no clear evidence yet that a low is in-place after four weeks of selling.

After a roller-coaster week for US stock markets, Friday saw the major indices bounced sharply off their lows to end the day on a positive note after the Nasdaq 100 had earlier dropped to the official threshold of a correction (10% from the recent high).

Stocks got rocked on Friday despite an abysmal PMI print, which suggests that the door may be opening for rate cuts later this year. Perhaps more concerning to the matter is the USD/JPY sell-off.

With much of the positivity surrounding a potential resolution to the Russia and Ukraine war, Trump’s softer tariffs tone and ECB rate cuts all priced in, you do wonder how much further the index will be able to rise without first staging a correction of some sort. So, our DAX forecast is neutral at these levels, and we would not be surprised if markets now headed lower for a while, even if, ultimately, the bullish trend then continues.

U.S. equity indices are up more than 3% YTD ahead of the Trump tariffs- resistance in view. Battle lines drawn on the SPX500, NDX and DJI weekly technical chart.

The upcoming week could kick off with a bang, even though Wall Street will sit Monday out due to Martin Luther King Day. Donald Trump is set to begin his second term as US President on the same day, ensuring a headline-filled start to the trading week.

Caught in the middle of an outperforming US and underperforming Chinese equities, European markets rallied last week despite fresh concerns about the eurozone economy. While the selling has been contained to the euro so far, should recession worries intensify then we could see the stock market also respond negatively, putting the DAX outlook on a negative watch.

As we head deeper into a pivotal week and a half, several high-impact events could shape market direction. Investors are bracing for a series of earnings reports from major companies, often referred to as the "Magnificent 7" stocks, alongside the US monthly jobs report. These, combined with the US election on November 5, represent a series of risk events that could sway investor sentiment and thus impact the Dow.