Dow Jones Forecast: DJIA rises boosted by the Fed's outlook

US futures

Dow future 0.07% at 39314

S&P futures 0.24% at 5591

Nasdaq futures 0.40% at 20535

In Europe

FTSE 0.65% at 8188

Dax 0.77% at 18365

• Stocks at record highs
• Powell testifies before the House Financial Services Committee
• AI-related stocks & big tech continue to rise
• Oil falls for a fourth day

Stocks at record highs, Dow lags

U.S. stocks are pointing to a higher start, with the S&P500 and NASDAQ 100 at all-time highs as investors await Federal Reserve chair Jerome Powell's second testimony this week.

Falling treasury yields and optimism that the Federal Reserve will cut rates soon keep the benchmark S&P 500 and the NASDAQ at record levels. The S&P500 closed at an ATH for the fifth straight session and the NASDAQ100 for the sixth straight session.

Yesterday, in his testimony before the Senate Banking Committee, Federal Reserve chair Jerome Powell noted that the economy was no longer overheated. Still, he also refrained from committing to a timeline for the next rate cut. Powell will appear again today in the House Financial Services Committee for further questioning.

Powell didn't rock the markets yesterday and is unlikely to do so again today. He adopted a modestly dovish bias but emphasized the risks.

Expectations of a 25 basis point rate cut in September are above 70%, up from around 45% a month ago. Federal Reserve officials Austin Goolsbee, Michelle Bowman, and Lisa Cook are due to speak today.

Banks will remain in focus ahead of the start of earnings season on Friday. Meanwhile, lower yields are also helping major tech with the magnificent 7 pushing higher.

Corporate news

Microsoft is pointing to a higher open on reports that the software giant is ready to give up an observation seat on the board of Open AI amid regulatory scrutiny into generative AI in the US and Europe.

Tesla will rise 0.5% on the open after Goldman Sachs, its price target for the EV manufacturer after stronger than expected Q2 deliveries.

Taiwan Semiconductor Manufacturing rose 2.4% after the world's largest chipmaker reported a 32% year-on-year growth in Q2 revenue. Other chipmakers were also climbing higher, with Nvidia set to open up 1.1%.

Wall Street forecast – technical analysis.

The Dow Jones is grinding higher, guided northwards by the 50 SMA. Buyers, supported by the RSI above 50 will look to rise above 39,600 to bing 40k into focus. On the downside, sellers will need to take out the 50 SMA at 39,080 and the July low at 38,900 to extend losses towards the 38,500 level.

FX markets – USD falls, GBP/USD rises

The USD is inching lower after modest gains yesterday. Federal Reserve chair Jerome Powell's speech failed to provoke a significant market reaction in FX. Investors will be looking at today's testimony for clues.

EUR/USD is rising, but gains are limited amid the ongoing political turmoil in France. Although the left-wing alliance won the election, they did not do so with the majority. In an attempt to form a government, complex negotiations will start, although the process could take months.

GBP/USD is rising as the elections are over and attention turns back to the Bank of England and interest rate expectations. Chief economist Huw Pill is due to speak today, and any signs that he's preparing the market for an August rate cut could pull GBP lower.

Oil falls for a fourth day

Oil prices are falling For the fourth straight session as investors await the release of OPEC's monthly oil report and as supply concerns ease.

Oil has fallen 3% over the last four days on growing optimism of a ceasefire deal in Gaza, which would ease supply concerns in the region. At the same time, Texas energy infrastructure escaped relatively unscathed from Hurricane Beryl’s hit, with supply once again going back online and ports reopening.

Attention is on the OPEC monthly report which will give some clues about the supply and demand outlook. It comes after EIA revised its demand outlook higher and lowered and its production forecast.

Attention will also be on the EIA stockpile data which is expected to show a draw as the summer driving season ramps up.