Dow Jones Forecast: DJIA falls in cautious trade ahead of tomorrow's CPI data

US futures

Dow futures -0.34% at 38598

S&P futures -0.23% at 5110

Nasdaq futures -0.37% at 17960

In Europe

FTSE -0.27% at 76309

Dax -0.56% at 17715

• Stocks extend last week’s losses
• The mood is cautious ahead of CPI data tomorrow
• Nvidia is set to open lower after plunging on Friday
• Oil falls after weaker China data

Stocks fall from record highs

U.S. stocks are pointing to a weaker open on Monday after losses last week, and the focus is on upcoming inflation data.

Profit-taking in the technology sector, particularly in Nvidia, saw Wall Street’s indices pull back sharply from record highs on Friday.

The Dow Jones lost 0.9% last week, its worst weekly performance since October, while the S&P 500 dipped 0.3% and the NASDAQ dropped 1.2%.

The market was also digesting a mixed non-farm payroll report, which showed stronger-than-expected job creation in February but a downward revision for January while unemployment rose and wage growth slowed.

Mixed data and the sell-off in AI firms raised questions over whether the impressive rally across February was running out of steam.

Investors will now look to tomorrow's inflation data for more clues on the path of US interest rates.

The data is expected to show some cooling in inflation, although the core annual figures are expected to remain well above the Fed's 2% target.

The data comes after Federal Reserve chair Jerome Powell said last week that policymakers were still looking for further evidence that inflation was cooling before cutting rates. However, he added that a rate cut could be near.

Corporate news

Crypto-related stocks are surging as Bitcoin rose above 70,000 to a fresh all-time high. Stocks such as Coinbase and MicroStrategy are set to open around 6% and 8% higher, respectively.

Nvidia is set to open lower as the AI darling continues Friday's sharp sell-off, as chip stocks lose momentum after hefty profit-taking following the recent run higher.

Duolingo is set to rise 1% after JP Morgan initiated coverage on the language learning platform with an overweight rating. The platform has 88.4 million monthly active users and 26.9 million daily users.

Dow Jones forecast – technical analysis.

The price has fallen away from the 39284 all-time high at the end of February, dropping below the rising trendline support and testing 385000 support. Should sellers extend losses below this level, 38,000 comes into focus, as does the February low. Should buyers defend 38500, bulls will look up toward 39000 and 39284 for fresh all-time highs.

FX markets – USD holds steady, USD/JPY falls

The US dollar is holding onto most of last week's losses as it hovers around its lowest level since mid-January. The mood is cautious ahead of US inflation data tomorrow, which could influence the Federal Reserve's monetary policy outlook.

EUR/USD is holding steady in quiet trade after posting strong gains last week. The euro gained last week even though the ECB signaled a June rate cut. This week, the eurozone economic calendar is quiet, leaving the USD as the likely largest influence on the pair.

USD/JPY has fallen below 147.00 to a fresh monthly low after the Japanese GDP was revised higher, meaning Japan avoided a recession at the end of 2023. Stronger data supports the view that the Bank of Japan could look to move away from negative interest rates as soon as the meeting next week.

Oil extends last week’s losses.

Oil prices are falling, extending last week’s losses after disappointing Chinese wholesale inflation data and Saudi Aramco's halting of plans to boost its oil production capacity.

Data over the weekend showed that while Chinese consumer price inflation was hotter than expected, wholesale inflation was weaker than forecast, raising concerns over the outlook for the Chinese industrial sector.

The data comes after the Chinese oil import data last week underwhelmed. China imported 10.74 million barrels from January to February, a 3.3% increase annually, but this was down from the 11.39 million barrels seen in December.

Separately, Saudi Aramco has paused plans to increase oil output, saying robust non-OPEC supply growth in recent months could lead to a severe supply glut in the market. These comments limit the upside.

Looking ahead, tomorrow's US inflation data could influence the demand outlook. The OPEC market monthly report will also be in focus.