Dow Jones Forecast: DJIA set for a quiet start below 40,000

Congress building
Fiona Cincotta
By :  ,  Senior Market Analyst

US futures

Dow future 0.04% at 39868

S&P futures 0.06% at 5297

Nasdaq futures 0.12% at 185750

In Europe

FTSE -0.12% at 8419

Dax -0.12% at 18700

  • US stocks point to a quiet start
  • Fed speakers in focus after warnings that rates must stay high for longer
  • Reddit rises on OpenAI deal
  • Oil rises on improving demand outlook

Fed speakers in focus amid a quiet economic calendar 

US stocks are pointing to a muted start on Friday as the recent rally following inflation data loses steam.

The S&P500 and the NASDAQ are still on course for a fourth straight week of gains, while the Dow Jones is set to book its fifth straight weekly advance. The Dow Jones is boosted by an upbeat earnings season and cooling inflation, which has raised rate-cut bets.

All three main indices reached record highs yesterday, with the Dow briefly crossing the key 40,000 psychological level before closing in the red.

Comments from Federal Reserve speakers warning that interest rates will need to remain high for longer have dampened the mood slightly.

No high-impacting U.S. economic data will be released today. Instead, attention will remain on Federal Reserve speakers, with comments from Christopher Waller and Mary Daly, which will be watched closely for clues on the timing and scale of possible rate cuts.

According to the CME Fed watch tool, the market is currently pricing in a 70% chance of the first rate cut in September.

Corporate news

Reddit is set to open 12% higher after the social media platform agreed to a partnership with OpenAI to add its content to the firm's AI products.

GameStop is set to open 10% lower as it continues to sell off after plummeting 30% yesterday as the rebound rally in meme stocks run out of steam.

Boeing will be in focus after the aircraft manufacturer's shareholders vote on whether outgoing CEO David Calhoun will retain his seat on the board of the troubled plane maker.

Dow Jones forecast – technical analysis.

The Dow Jones has extended its runup from the April low of 37236 to a high yesterday above 40,000. Buyers will look to rise above the 40,000 mark to fresh all time highs. On the downside, support can be seen at 39300, last week’s low and February's high. Below here, 38500, the March low comes into focus.

dow jones forecast chart

FX markets – USD rises, GBP/USD falls

The USD is rising for a second straight day after more hawkish commentary warned that interest rates will need to stay high for longer. Federal Reserve chair Jerome Powell is due to speak over the weekend and could provide more clarity on when the Fed could cut rates.

EUR/USD as falling after eurozone data confirmed that inflation cooled to 2.4% in April and core inflation eased to 2.7%, supporting the view that the ECB will start cutting interest rates next month.

GBP/USD drifting lower amid a lack of fresh fundamental catalysts. The Paris still on track to gain across the week as attention moves to next week's UK inflation data which could be key in deciding whether the Bank of England will cut rates in June or September.

Oil rises on an improving demand outlook

Oil prices are inching higher and on track to book gains across the week after China and U.S. data raised optimism over the demand outlook.

China's industrial output rose 6.7% in April, ahead of forecasts and up from 4.5% in March, pointing to a possible stronger demand to come. China also announced steps to stabilize its troubled property sector, which could also help the recovery of the world's largest oil importer.

Demand for oil and refined products eased this week, raising hope that demand could be improving and reversing a recent trend of rising stockpiles, which had weighed heavily on the oil price in recent weeks.

Finally, U.S. data this week showed that consumer prices cooled in April, raising  expectations of a lower interest rate environment, which would be beneficial for growth and again help the demand outlook.


Related tags: US Open Dow Jones USD Oil

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