US market: overview and forecast for January 21. The Bears are on the defensive

The market the day beforeOn May 18, US stock exchanges ended in negative territory. The S&P 500 dropped by 4.04% to 3,924 points, the Nasdaq lost 4.73%, the Dow Jones adjusted by 3.57%. All sectors included in the broad market index closed in the red. Discretionary (-6.60%) and non-cyclical consumer goods (-6.38%) showed the largest drop. Utility providers experienced less pressure (-1.03%).Company newsChevron (CVX: -2.64%) is launching a carbon capture and storage project to reduce the carbon intensity of mining in California.Cisco (CSCO: -4.43%) reported revenue worse than expected and demonstrated a slowdown in sales growth under the influence of the unfavorable geopolitical situation and anti-covid restrictions in China. Management revised the forecast of revenue increase from 4.5% to 2-3%.Target Corp. (TGT: -24.93%) generated revenue above consensus for the quarter, but the retailer's profit halved due to high fuel and freight costs. The management confirmed the sales forecast for the current fiscal year, but lowered the operating profit target.We expectOn the eve of the Dow Jones and S&P 500 showed the deepest drop since June 2020. The market dynamics was determined mainly by the collapse of the shares of the largest retail chains Walmart (WMT) and Target Corp. (TGT). The quarterly reports of both retailers reflect the pressure on profitability of increased logistics costs and labor costs in conditions of high inflation. At the same time, the dynamics of sales volumes signals the sustainability of consumer spending. According to the US Department of Commerce, retail sales increased by 0.9% mom in April, without adjusting for inflation at 0.3% mom, which indicates a steady real pace. Sales of the control group of products excluding volatile components increased by 1.0% mom, exceeding expectations. At the same time, the estimate of total sales growth for March was increased from 0.5% to 1.4% mom. At the same time, due to price pressure, the structure of household spending is gradually being transformed. Preference is increasingly being given not to the purchase of durable goods and discretionary categories that provide higher margins for retailers, but products for everyday consumption. In addition, on the eve of the holiday season, there is a tendency to increase the demand for services, in particular in the field of recreation and entertainment.According to FactSet, as a result of the recent sell-off, the S&P 500 is trading with a forward multiplier of "price to earnings" (P/E) of 16.6, and this is the minimum after the 2020 correction caused by the pandemic factor.The stock exchanges of the Asia-Pacific region ended trading on May 19 mostly in the red. Japan's Nikkei adjusted by 1.89%, Hong Kong's Hang Seng dropped by 2.54%, China's CSI 300 added 0.19%. EuroStoxx 50 has been losing 2.37% since the opening of the main session.The price of Brent crude oil futures dropped to $107.7 per barrel. Gold is trading at $1,824 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 3870-3930 points.MacrostatisticsToday, data on sales in the secondary real estate market in the United States for April will be presented (forecast: 5.6 million vs. 5.77 million in March). The Philadelphia Federal Reserve's manufacturing activity index for May will also be published (forecast: 17.0 points after 17.6 in April).Sentiment IndexThe sentiment index dropped 4 points to 32.Technical pictureThe S&P 500 was unable to continue the rebound, and its growth over the past five trading sessions was leveled the day before. The RSI is still close to the oversold zone, the MACD indicates another strengthening of the bears' positions. If the broad market index manages to stay above the support at the level of 3860 points, a "double bottom" pattern may form on the chart, which will create conditions for the resumption of local growth.

American electric car manufacturer Tesla was excluded from the S&P 500 ESG index following the results of the annual rebalancing. As the reasons for this decision, it is stated that Tesla lags behind other companies in a number of ESG criteria (environmental and social factors, as well as corporate governance factors). The electric car manufacturer is accused of racial discrimination and poor working conditions at Tesla's main plant in the United States, and the company has also faced investigations after autopilot-related accidents. Representatives of the ESG index department in North America reported that Tesla was let down by its lack of a strategy to reduce carbon dioxide emissions and a code of business conduct.The CEO of Tesla was outraged by this decision and commented extremely negatively on this news on his Twitter account, saying that Tesla is doing more for the environment than any other company has ever done.Tesla shares on Nasdaq on May 18 fell by 6.8% to $709.81 per share. The decline continued in the postmarket.

The stock prices of Chinese companies traded on stock exchanges in the United States rose in the main session on May 17 after Chinese Vice Premier Liu He announced support for the digital economy industry. He said that the government will support the development of digital economy companies and their public lists. China's vice premier gave similar assurances two months ago when he also promised to maintain market stability and stimulate the economy.Against this background, the shares of the Chinese Alibaba Group on Nasdaq rose by 6.37% to $91.99 per share. Baidu securities rose by 4.79% to $123.44 per share.

The market the day beforeThe session on May 17, the main American stock exchanges ended in the green zone. The S&P 500 rose 2.02% to 4,088 points, the Dow Jones gained 1.34%, and the Nasdaq rose 2.76%. Producers of consumer goods looked worse than the market (-1.15%). Technology companies (+2.91%), raw materials (+2.86%) and financial (+2.69%) sectors became the leaders of growth.Company newsPlug Power Inc (PLUG: +14.00%) has received an order for the supply of an electrolysis plant for the production of green hydrogen with a capacity of up to 100 thousand tons per year.Coinbase Global Inc (COIN: +13.45%) has postponed its plans to triple the number of employees in 2022.Caterpillar Inc (CAT: +2.85%) announced that the Board of Directors approved a new $15 billion share repurchase program.We expectOn the eve of the S&P 500, almost 4% exceeded the closing minimum since the beginning of the year, which was set last Thursday. One of the factors supporting the uptrend was the expectations associated with the removal of the lockdown in China. Shanghai has not reported new cases of COVID-19 infection outside quarantine zones for three days in a row. This gives grounds to expect the recovery of production volumes of the largest companies to the levels of the beginning of the year. Hong Kong plans to ease quarantine restrictions this week. Japan intends to open entry to small groups of tourists by the end of May.Another important news event yesterday was an interview with the head of the Federal Reserve Jerome Powell Wall Street Journal. The chairman of the regulator, in an interview with reporters, confirmed his intention to raise interest rates more actively, if necessary, in order to stimulate a more noticeable slowdown in inflation. At the same time, Powell noted that if inflation does decrease, the tightening of monetary policy will be more moderate. Plans were also confirmed to raise the rate by 50 bps at the next two FOMC meetings. At the same time, the head of the Federal Reserve stressed that its increase by 75 bps. not discussed yet.The yield of 10-year treasuries since yesterday's trading increased by 9 bps, to 2.97%, for two-year securities, the yield increased by 10 bps, 2.68%, for 30-year securities it reached 3.16%.Trading on May 18 on the sites of Southeast Asia ended mainly in the green zone. Japan's Nikkei 225 rose by 0.94%, Hong Kong's Hang Seng added 0.17%, only China's CSI 300 declined by 0.35%. EuroStoxx 50 has been losing a symbolic 0.08% since opening.Brent crude futures are quoted at $111.93 per barrel. Gold is trading at $1818.20 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 4070-4120 points.MacrostatisticsToday, data on the number of construction permits issued in the United States for April will be published (consensus: 1,812 million after 1,870 million in March).Sentiment IndexThe market sentiment index rose by 1 point to 36.Technical pictureThe S&P 500 remains above the support level of 3,860 points. The RSI indicator is still close to the oversold zone, and the MACD may be giving a signal for the beginning of an upward trend. These factors may mean continued growth in the upcoming trading session.

The Board of Directors of Caterpillar, the world's leading manufacturer of construction and mining equipment, has approved a share repurchase program worth up to $15 billion.Since 2017, the company has annually achieved financial targets and as a result generated free cash flow of $26 billion. Caterpillar also plans to return virtually all of its free cash flow to shareholders over time.Caterpillar shares on the NYSE on May 17 rose by 2.58% to $213.09 per share.

Streaming service Netflix is laying off about 150 people, mainly in the US, which is 2% of the total number of employees. This decision is due to the company's attempts to reduce the growth of costs after Netflix presented a disappointing report last month.As previously reported, the company intends to reduce some of its expenses in the next two years. Although Netflix will continue to allocate about $17 billion a year to develop new TV shows and movies, the number of people working behind the scenes will decrease.Netflix renews collaboration with visual effects and animation company DNEGVisual effects and animation company DNEG has extended its deal with streaming service Netflix until 2025. The agreement was concluded for at least $350 million. The films and TV movies created under the partnership include "Very Strange Things" and "Project Adam".The ReDefine division of DNEG will also provide VFX services and creative control over individual Netflix programs.Netflix shares on Nasdaq on May 17 rose 2.17% to $190.56 per share.

Mastercard Inc. payment system has started testing a biometric payment system for stores using facial recognition. The company said that its new project will allow the buyer to scan his face using the retailer's smartphone app and link it to a bank card. This technology is comparable to how FaceID is used in the iPhone to approve payments or unlock the device.The pilot program began this week at five St Marche supermarkets in Sao Paulo, Brazil. The stores will use an application developed by the Brazilian startup Payface.Mastercard shares on the NYSE on May 17 rose by 2.77% to $338.86 per share.

One of the largest oil companies, Exxon Mobil, together with the Norwegian energy company Equinor SA, have taken the first steps to expand an oil development worth $8 billion off the coast of Brazil. The companies want to increase future production at the Bakalhau oil field, Equinor's largest project outside Norway with reserves of more than 1 billion barrels of oil.At the next stage, the possibility of building a second drilling rig and a second floating production platform, as well as a gas pipeline more than 100 miles long, is being considered.For Exxon, Bacalhau can provide the first barrel of oil offshore Brazil, which is one of the company's main promising areas of growth, as well as new oil supplies as a result of operations with lower carbon emissions. Production of the first oil is planned for 2024 on a vessel with a capacity of 220,000 barrels per day.Bakalhau is the first subsalt deposit in Brazil that is not being developed by a state-owned company.Exxon Mobil shares on the NYSE on May 16 rose by 2.35% to $90.95 per share.