US Manufacturing and Earnings in Focus
US futures faced increasing selling pressure during the Asian session on February 2. The Dow Jones E-mini fell 184 points, while the Nasdaq 100 E-mini and the S&P 500 E-mini declined 98 points and 48 points, respectively.
Later on Monday, the US ISM Manufacturing PMI will influence risk sentiment. Economists expect the ISM Manufacturing PMI to rise from 47.9 in December to 48.3 in January. A higher PMI reading would indicate a less marked contraction across the manufacturing sector, supporting demand for risk assets.
However, traders should consider the employment and prices sub-components, given the Fed’s dual mandate. Falling employment and prices would support a more dovish Fed rate path. Lower borrowing costs would boost company earnings and equity valuations, overshadowing risks of a yen carry trade unwind.
Beyond the economic data, corporate earnings will also influence risk sentiment. Disney (DIS) is among the big names scheduled to release earnings results.
Strong earnings, coupled with softer manufacturing sector employment and prices, would support a rebound in US index futures, affirming the bullish medium-term outlook.
Key Technical Levels for Dow Jones, Nasdaq 100, and S&P 500
The latest pullback left the Nasdaq 100 E-mini trading below its 50-day EMA, while holding above the 200-day EMA. The EMA positions indicated a bearish near-term, but bullish longer-term outlook. Meanwhile, the Dow Jones E-mini and the S&P 500 E-mini remained above their 50-day and 200-day EMAs, indicating a bullish bias, aligning with favorable fundamentals.
Near-term trends will hinge on geopolitical tensions, earnings, US economic indicators, Fed chatter, and the BoJ’s policy stance. Key levels to monitor include:
Dow Jones
- Resistance: 49,000, the January 13 record high of 49,901, and then 50,000.
- Support: the 50-day EMA (48,605).