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30.05.2023 02:30 PM
US pre-market trade on May 30, 2023. US stocks test yearly highs

US stock index futures continued to rise on Tuesday morning due to strong demand for shares of tech companies directly related to the development of artificial intelligence. US Treasuries rose on hopes that Congress will pass an agreement to raise the national debt limit, which will prevent a default. Today, hearings will be held in the House of Representatives, and all interested parties will be able to find out the details of the agreement reached. Fed policymakers will consider the details of the deal when they meet next month to decide whether to raise rates by 25 basis points or finally pause the cycle.

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Meanwhile, the S&P 500 and Nasdaq 100 futures rose by 0.5% and 1.1% respectively. Nvidia's market value is about to top $1 trillion as premarket growth continues today. CEO Jensen Huang has unveiled several AI-related products and services, boosting demand for the stock. Shares of other AI-related companies also rose, including Advanced Micro Devices Inc., Intel Corp., Qualcomm Inc., and Meta Platforms Inc.

Investors hope that artificial intelligence will spur explosive demand for tools like ChatGPT, so they are betting on further growth in the technology sector and are actively buying up shares of these companies. The new AI technology is expected to expand beyond the tech industry to encompass everything from agriculture and factories to pharmaceuticals and climate change.

European stock indexes are also trading in positive territory. Growth was marginally capped by losses in Nestle SA and Unilever Plc shares, which tumbled after both companies announced new CFOs, saying inflation was putting pressure on the industry. Eurozone government bonds rose on data showing Spanish inflation slowed more than expected in May.

Optimism around the US debt ceiling deal is slightly overshadowed by China's pessimism amid disappointing economic data. The Hang Seng China Enterprises index approached a bear market, and the yuan fell below 7.1 per dollar for the first time since November. Oil prices depreciated amid concerns about volatile demand.

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Another question on the minds of investors is whether US GDP growth will remain at a good enough level this year after the tightening of credit conditions, which is manifested in many areas. Worsening monetary conditions and a possible recession could force the Fed to turn to lower interest rates by the end of the fourth quarter of this year. But at the moment, these are just speculations.

As for the technical outlook for the S&P 500, it is still in demand, and buyers have a good chance to develop an uptrend. Bulls need to do their best to protect the level of $4,200 from where a breakout to the $4,229 level is possible. Another priority for the bulls will be to control $4,290, which will strengthen the bullish market. In the case of a downward movement amid no progress in the US government debt talks, bulls will have to assert their strength at $4,175 and $4,143. A breakout of these levels will quickly push the trading instrument back to $4,114 and even to $4,091.

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