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.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.