Dow Jones Forecast :Stocks muted ahead of Fed speakers

US futures

Dow futures +0.17% at 33663

S&P futures +0.04% at 4338

Nasdaq futures 0% at 15048

In Europe

FTSE +1.55% at 7607

Dax +1.4% at 15340

• Several Fed officials are due to speak
• IMF upwardly revises US GDP for 2023 & 2024
• PepsiCo upwardly revised forecasts
• Oil falls after strong gains yesterday

Fed speakers are in focus after less hawkish comments yesterday

U.S. stocks are pointing to a muted open after booking modest gains in the previous session and as investors look ahead to several Federal Reserve speakers.

All three main indices closed higher on Monday after Federal Reserve officials raised questions over whether the US central bank would hike interest rates again before the end of the year, given the recent move higher in US bond yield.

While Fed vice chair Philip Jefferson said that the central bank could proceed carefully over whether to raise interest rates again or not, Dallas Fed President Lorrie Logan nodded to rising treasury yields as a reason for the Fed to steer away from further rate hikes. Meanwhile, US 10-year treasury yields also dropped away from their 16-year peak, supporting equities.

Looking ahead, the US economic calendar is quiet; instead, the focus will be on several Federal Reserve officials due to speak, including Raphael Bostic, Neel Kashkari, Mary Daly, and Christopher Waller.

The market will be watching closely for their views on the economic and inflationary outlook and or the future path of Interest rates.

Meanwhile, the IMF has upwardly revised US growth forecasts for 2023 To 2.1%, up 0.3% from its July forecast. The lender noted that the US has seen stronger business investment and resilient consumption, boosting growth. US growth forecasts for next year were also upwardly revised to 1.5% from 1% in July.

Corporate news

PepsiCo has released its Q3 earnings, with the soft drink giant lifting annual profit forecasts for a third time this year. Resilient demand has helped the snacks and beverages firm raise prices multiple times. The stock posted EPS of $2.25 on $23.45 billion in revenue. This was above the forecast of $2.15 and $23.39 billion in revenue.

Rivian is rising premarket after the electric truck maker was upgraded by UBS to buy from neutral, citing improving fundamentals after a recent $1.5 billion capital rise sparked a sell-off.

Birkenstock’s IPO is due to price today and is expected to do so at the top of the range of $44-$49, attaining a $10 billion valuation. The German premium footwear company, which will list on the New York Stock Exchange, will begin trading tomorrow.

Dow Jones forecast – technical analysis.

The Dow Jones is extending its rebound from 32815, the October low, and has pushed over 33600, the July low. This, combined with the bullish crossover on the MACD, keeps buyers hopeful of further gains. Buyers will look for a rose above the 200 sma at 33840 to extend gains towards 34150, the April high. Failure to hold above 33600 could see the price fall towards 33300, the September low, and 32815.

FX markets –USD falls, EUR rises

The USD is falling after Federal Reserve comments raised questions over whether the Fed will raise interest rates again this year and as treasury yields eased lower. All eyes are on many Fed speakers later today for further clues over the potential direction of interest rates.

EUR/USD is edging higher, capitalising on the weaker USD as investors digest a downward revision for the euro area growth forecast this year. The IMF sees the euro area growing 0.7% in 2023, 0.2% lower than previously expected, and in 2024, growth was lowered 0.3% to 1.2%. The euro is also shrugging off comments by France’s central bank president, Francoise Villeroy, who said that rates don't need to rise further for now.

GBP/USD is holding steady after the IMF reported that the UK is set to have the slowest growing economy among the G7 next year. UK GDP is expected to grow just 0.6% in 2024, downwardly revised from 1%. The IMF also said that the Bank of England needs to raise rates at least once more to 5.5% and keep rates there through next year.

EUR/USD +0.2% at 1.0587

GBP/USD +0.06% at 1.2246

Oil eases after yesterday’s jump

After gains of 4% yesterday, the oil markets have turned cautious, with prices edging lower.

Yesterday, Hamas – Israel clashes raised fears that the conflict could spread beyond Gaza. While fighting has continued, and there is still plenty of uncertainty, the market seems to accept that oil flows will not be directly affected.

Additionally, there has been no evidence so far that Iran is complicit in the attacks, giving oil traders little reason to push prices higher, at least for now.

WTI crude trades -0.6% at $84.68

Brent trades -0.6% at $87.09

Looking ahead

14:30 Fed Bostic speaks

18:30 Fed Waller speaks

20:00 Fed Kashkari speaks

23:00 Fed Daly speaks