US Consumer Sentiment Preview: S&P 500 to struggle on a read under 78

The UoM Consumer Sentiment has the last word week with up-to-date on a crucial part of the economy – which may be about to turn down. The reading has the potential to set the tone for stocks and the dollar as a reading below expectations would weigh on the S&P 500 and boost USD, Yohay Elam, an analyst at FXStreet, briefs. 

Key quotes

“University of Michigan’s Preliminary Consumer Sentiment Index for July is set to show a minor increase to 79 points from the final read of 78.1 in June.”

“Within expectations: Anywhere between 78 – close to June's figure – and 80 would be considered within forecasts and would likely leave S&P 500 unchanged, leaving the focus on other developments such as updated COVID-19 statistics, Sino-American relations, and companies' earnings. The dollar would trade differently against each currency.” 

“Above expectations; Scores above 80 and potentially closer to 90 would already show that Americans are brushing off the recent deterioration – or perhaps that it has not affected all consumers. The S&P 500 could close the week on a positive note and the greenback could pare some of its gains.”

“Below expectations: Any read under 78, and especially closer to the trough of 71.8 would already show that shoppers have become shy and concerned – potentially plunging the economy. In this scenario, the S&P 500 would struggle and decline while the safe-haven dollar would shine.”