Dow Jones Forecast: DJIA kicks off Q3 modestly higher

US futures

Dow future 0.1% at 39174

S&P futures 0.17% at 5472

Nasdaq futures 0.23% at 19730

In Europe

FTSE 0.01% at 8178

Dax 0.58% at 18348

• Stocks rise after a mixed Q2
• NFP, Fed Powell to speak & FOMC minutes are due this week
• Chewy jumps as Keith Gill discloses a position
• Oil on track for a weekly rise

Stocks rise ahead of a key week

U.S. stocks aim for a higher start in a holiday-shortened week ahead of Friday's crucial non-farm payroll report.

Wall Street is starting a fresh quarter after a mixed Q2. The S&P 500 and the Nasdaq 100 added 3.9% and 8.3%, respectively, thanks to excitement in AI stocks. However, the Dow Jones fell 1.7% across the quarter.

This week's primary focus will be Friday's non-farm payroll report, which could provide clues about when the Federal Reserve may start cutting interest rates. After Friday’s cooling core PCE, the market is increasingly expecting the Fed to cut rates sooner, possibly even in September. Core PCE eased to 2.6 YoY, its lowest level in three years.

Federal Reserve chair Jerome Powell will speak at the European Central Bank's annual forum in Sintra, Portugal. On Wednesday, the Fed's June meeting minutes will also be released, providing plenty of catalysts for traders.

Today, the market will be watching ISM manufacturing PMI data, which is expected to show that the US manufacturing sector contracted at a slower pace in June, 49.1, up from 48.7 in May.

Corporate news

Chewy is set to open sharply higher on Monday after stock influencer Keith Gill revealed a 6.6% stake in the company. Gill, also known as Roaring Kitty, posted a cryptic social media message featuring a picture of the dog. The disclosure was filed with the US SEC following the 2021 meme stock frenzy.

Meta is set to open higher despite the European Union preparing to charge Meta with breaking the Digital Markets Act, designed to rein in the power of big tech firms and ensure a level playing field.

Boeing is due to open lower after announcing that it would buy Spirit Aero Systems in a deal worth $4.7 billion. After months of talks, which were complicated by Spirit's interaction with Airbus, the plane maker finally agreed to a deal for its key supplier. Boeing hopes the move to take control of Spirit will resolve quality issues that have plagued the supply in recent years.

Dow Jones forecast – technical analysis.

The Dow Jones trades just above 39000 support for another day. The price will need to rise above 39,615 to extend gains towards 40,000. Sellers must break below 39000 to expose the 50& 100 SMA at 38,800, which offered support last week, before bringing 38,500 into focus.

FX markets – USD falls, EUR/USD rises

The USD is falling, extending losses from last week after core PCE came in weaker than expected. This boosted expectations that the Federal Reserve could start to cut interest rates sooner.

EUR/USD is rising after the far-right euro-skeptic national rally party won the first round of the French elections with a smaller margin than some polls had forecast, meaning that it's less likely that the far right would seek that Marine le Pen's party would secure an absolute majority. The market had been fretting over a far-right absolute majority, which would mean an expansive fiscal policy lifting debt levels in France. The second round of voting happens on Sunday.

GBP/USD rose after the June UK manufacturing PMI, which was downwardly revised to 50.9 from the preliminary reading of 51.4. This was also down from May's reading of 51.2. Yet despite growth in the sector, slowing inflationary pressures returned, with input prices rising at the quickest pace since January 2023. Attention is also on the elections, with the UK heading to the polls on Thursday.

Oil rises on demand optimism.

Oil prices are rising at the start of the week, boosted by expectations of high summer consumption and OPEC+ production cuts. However, gains were capped by rising output from producers outside of OPEC and the changing political landscape.

Oil gained around 6% in June as the OPEC+ group extended most of its oil output cuts well into next year and on expectations of a supply deficit in the third quarter as demand during the summer months eats into stockpiles.

Meanwhile, hopes of an interest rate cut by the Federal Reserve and writing geopolitical firms in Europe between Israel and Hezbollah to keep prices are well supported.