The US market: an overview and forecast for May 22. The vector of bidding will be set by geopolitics

Our Expectations

The situation surrounding Iran continues to be characterized by a high degree of uncertainty. The final version of the peace agreement between Washington and Tehran was not announced yesterday, although it had previously been expected in the near term. Negotiations are ongoing, but disagreements remain on key conditions. The main points of contention involve Iran’s stockpiles of enriched uranium and the navigation regime through the Strait of Hormuz. Concerns over potential oil shortages caused by disruptions to this route continue to support higher oil prices.

At the same time, at the initiative of Republican lawmakers, consideration of a resolution to end the war with Iran has been postponed until June. As a result, the White House retains room to continue military operations, although congressional pressure on the administration is increasing.

The key macroeconomic release of the day will be the final May reading of the University of Michigan Consumer Sentiment Index (consensus: 48.2 points, unchanged from the preliminary estimate). Given the already weak preliminary reading, a minor revision is unlikely to alter the broader conclusion that consumer sentiment remains under pressure. The Kansas City Fed Services Activity Index for May (April: 3 points) will also be released. Comments from Federal Reserve Governor Christopher Waller will be closely watched for insights into inflation risks, the economic impact of elevated oil prices, and the outlook for monetary policy.

Before the market opens, earnings reports will be released by BJ's Wholesale Club and Booz Allen Hamilton.

S&P 500 futures are showing moderately positive performance. We assess the risk balance as neutral with moderate volatility. Resistance for the broad market index is located at 7,500 points, while support is near 7,400 points.