S&P500 Forecast: PCE Inflation Report Looms as Dell’s AI Prospects Face Uncertainty

What’s Driving the Market Today?

U.S. stock futures were largely unchanged on Wednesday as investors focused on upcoming economic data, particularly the Federal Reserve’s preferred inflation measure, the personal consumption expenditures (PCE) price index. This report, due at 15:00 GMT, is expected to influence the Fed’s policy decisions heading into December. Dow Jones Industrial Average futures rose by 19 points, while S&P 500 and Nasdaq-100 futures dipped by 0.1% and 0.22%, respectively.

Trading is expected to remain subdued due to the Thanksgiving holiday on Thursday and an early close on Friday, limiting market volumes.

Broad-Based Indexes: What’s Shaping Market Sentiment?

The PCE price index, excluding food and energy, is forecasted to rise 2.8% year-over-year, as per Dow Jones estimates. Coupled with personal income and consumer spending data for October, this report could shape the Fed’s stance on further interest rate cuts. The minutes from the Fed’s November meeting highlighted a cautious approach, with officials aiming for gradual reductions in rates while acknowledging progress on inflation and labor market stability.

Investors remain on edge over how inflation trends could influence the Fed’s timeline for achieving a more neutral monetary stance, keeping index futures near flat.

Sector News: AI Sales Drive Tech Interest but Challenges Persist

SoftBank’s announcement of a $1.5 billion tender offer for OpenAI shares also reinforced AI’s central role in shaping tech investment. The deal follows OpenAI’s $6.6 billion October funding round, highlighting ongoing investor appetite in this space.

Stocks: Dell Disappoints Despite AI Growth Potential

Dell Technologies saw its stock drop 10% in after-hours trading after Q3 revenue of $24.4 billion fell short of estimates, despite beating earnings expectations with $2.15 per share versus the expected $2.06. The company’s Q4 revenue guidance of $24 billion to $25 billion also came in below Wall Street’s estimate of $25.57 billion, dampening investor confidence.

Despite the near-term revenue miss, Dell’s AI server pipeline remains strong, with $3.6 billion in booked orders and a $4.5 billion pipeline of future sales. The company emphasized that AI demand is in its early stages and poised for long-term expansion, though volatility may persist as customers adjust to evolving product roadmaps.

Market Forecast: Where Could the Market Be Headed Next?

The PCE inflation reading will likely dictate market movements in the near term. A softer-than-expected print could fuel a bullish sentiment across indexes, especially for tech-heavy sectors. On the other hand, higher inflation could revive concerns over Fed tightening, dampening market sentiment.

Dell’s outlook underscores the sector’s longer-term reliance on AI growth but points to potential short-term pressure from shifting customer demand. Broadly, investors should remain cautious heading into a holiday-shortened trading week, with low volumes potentially exacerbating market swings.

More Information in our Economic Calendar.