Dow Jones Forecast: DJIA falls but remains close to its record high

US futures

Dow future -0.10% at 43216

S&P futures -0.22% at 5850

Nasdaq futures 0.40% at 20239

In Europe

FTSE -0.26% at 8334

Dax -0.75% at 19512

Stocks slip ahead of a busy week for earnings
Boeing rises on workers’ deal optimism
Oil rises, recovering some of last week’s 7% drop

Stocks slip ahead of a busy week for earnings

After reaching an all-time high last week, US futures were trading lower pre-bell ahead. Today is set to be a quiet day for economic announcements and this week the economic calendar remains quiet, However, corporate earnings will ramp up across the week.

114 S&P 500 companies, including IBM, Tesla, and Coca-Cola, are due to report quarterly earnings this week. Meanwhile, figures from Texas Instruments will keep the spotlight on the chip sector.

As of Friday, 83% of the S&P 500 companies that had reported so far have beaten earnings estimates. This was ahead of the 79% average for the previous four quarters, although it's still very early days.

A fairly solid start to earnings season, along with last week's stronger-than-expected retail cell data, have helped continue to fuel optimism that the US economy will avoid a recession and could help the S&P 500 inch closer to the 6000 mark.

However, plenty of risks remain, including rising geopolitical tensions in the Middle East, gains in treasury yields, and concerns surrounding the upcoming U.S. presidential elections.

Today the economic calendar is quiet; instead, attention will be on Fed officials, including Lorie Logan, Neil Kashkari, and Mary Daly, who are due to speak and could shed more light on the Fed’s future path for interest rates.

The market is pricing in A 90% chance of the Fed cutting rates by 25 basis points in the November meeting and a 10% probability that the Fed will leave rates unchanged.

Corporate news

UPS is falling after analysts at Barclays revised its investment stance to underweight from equal weight, citing increased competition from Amazon and FedEx.

Boeing stock rose 3.2% after reports that workers could vote on a new deal to end the costly 5-week-long strike. Meanwhile, reports in the Wall Street Journal suggest the company is exploring asset sales allegations.

Dow Jones forecast – technical analysis.

The Dow Jones has broken out of the ascending channel that it has been trading in since late March. The price trades above its near-term rising trendline and hovers just below its ATH of 43,325. The RSI supports further upside while it remains out of overbought territory. Buyers will look to keep pressing higher, towards 44k. Support can be seen at 42.6k—42.5k, last week’s low, and the rising trendline support. Below here, 41.9k support, the October low comes into play.

FX markets – USD rises, EUR/USD falls

The USD is rising, heading into its fourth straight weekly gain. The USD is being influenced by the Trump trade, whereby Trump's policies are considered inflationary, so the Federal Reserve could cut rates at a slower pace.

EUR/USD is falling after German PPI fell by more than expected in September pointing to a weak demand environment. PPI fell 1.4% YoY, down from -0.8% in August. The data points to further declines in consumer inflation, which is already below the central bank’s 2% target. Yeah

GBP/USD is falling amid a stronger USD and the risk-off-market mood. Looking ahead, the marker will be watching BoE Governor Andrew Bailey, who is due to speak tomorrow. Bailey could shed more light on the central bank's future path for interest rates, particularly after the UK CPI fell below the central bank's 2% target to its lowest level in three years. The market is pricing in a November rate cut.

Oil rises, recovering from 7% losses last week

Oil prices are edging higher on Monday, recovering some of last week's steep losses. Oil prices are rising amid fresh Israeli strikes in Lebanon and Chinese stimulus measures.

Oil is regaining some of last week's 8% losses, which came on easing concerns over the potential disruption of Iran's oil supplies and fears of a weaker global demand outlook.

However, tensions in the Middle East have ramped up again over the weekend, lifting the risk premium on oil.

Saudi Aramco CEO said at an energy conference he is bullish on Chinese oil demand after a recent increase in policy support. On Monday, the PBOC cut the one-year and five-year loans prime rates by more than expected, adding to previously announced supportive measures.

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