Dow Jones Forecast: DJIA trades quietly at record highs awaiting the next catalyst

US futures

Dow future 0.03% at 42210

S&P futures -0.03% at 5734

Nasdaq futures -0.1% at 19925

In Europe

FTSE -0.08% at 8278

Dax -0.32% at 18928

• Stocks steady at record highs
• Markers mull over China stimulus & US consumer confidence data
• US jobless claims and core PCE are the next test
• Oil gives back yesterday’s gains on demand worries

Stocks steady at record highs

U.S. stocks are heading for a quiet start after gains yesterday and as the market waits for further clues over the health of the economy after the Fed started its rate-cutting cycle last week.

The US S&P 500 and the Dow Jones closed at record highs for a second straight day yesterday, with resource stocks doing most of the heavy lifting following China's stimulus package.

However, data showing consumer sentiment in the US dropping by the largest measure in three years has revived worries that the US economy could be on track for a sharp slowdown.

The markets are pricing in a 58% probability that the Fed will cut interest rates by 50 basis points further in November, up from a 50/50 coin toss just a week earlier.

On the data front, the economic calendar is relatively quiet today, with only new home sales in focus. The next major test for the markets will be jobless claims figures tomorrow and US core PCE data on Friday.

Meanwhile, Fed speakers will also be under the spotlight, with comments from Fed governor Adriana Kugler due after the market close and Federal Reserve chair Jerome Powell hitting the airwaves tomorrow.

Corporate news

Nvidia is rising further after gaining almost 4% yesterday. The chip giant's CEO, Jensen Huang, appears to be done selling Nvidia shares. He has offloaded more than $700 million worth of shares under a trading plan.

Ford General Motors and Rivian are falling 2% to 3% each after Morgan Stanley lowered its views on the auto industry and downgraded these three firms.

KB Homes is set to open over 6% lower after the home builder reported Q3 earnings that missed forecasts and provided weaker-than-expected guidance.

Dow Jones forecast – technical analysis.

The Dow Jones trades within a rising channel. The price has risen to fresh record highs above 42.2k but is running into the upper band of the rising channel, dating back to the start of April. The RSI is on the brink of overbought territory, so buyers should be cautious. A rise above the trendline resistance opens the door to a 43k round number. On the downside, support is seen at 41,565, the August high. It would take a fall below 40k to create a lower low.

FX markets – USD rises, GBP/USD falls

USD rises after losses yesterday but remains near yearly lows after yesterday's weak U.S. consumer confidence data following Chinese stimulus measures.

EUR/USD is rising but has so far failed to push above 1.12. While the euro has broadly been able to capitalise on the weaker U.S. dollar concerns over a recession in Germany and concerns over the health of the broader eurozone economy could limit gains.

GBP/USD is falling from a 2.5-year high. Market attention turns to the UK budget next month, which is followed by the Bank of England interest rate decision eight days later. This will likely be a challenging period, particularly as tax hikes are expected.

Oil gives back yesterday’s gains on demand worries.

Oil prices are falling, giving up yesterday's gains as investors weigh up the global demand outlook.

Weaker-than-expected U.S. consumer confidence data has raised concerns over softer demand in the U.S. This is offsetting news that China unveiled a barrage of stimulus measures to support the slowing economy. However, there are concerns that these stimulus measures may not be enough to inject sustainable growth into the Chinese economy.

Attention is now turning to US EIA stockpiles, which come after API data yesterday showed that stockpiles experienced a larger-than-expected draw of 4.3 million barrels, compared to the expected 1.1 million barrels forecast.