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Dow Jones Forecast: DJIA slips after the election debate & CPI data

Article By: ,  Senior Market Analyst
September 11, 2024 2:08 PM

US futures

Dow future -0.30% at 40603

S&P futures -0.02% at 5492

Nasdaq futures 0.17% at 18873

In Europe

FTSE 0.14% at 8233

Dax 0.71% at 18317

  • Kamala Harris wins the Presidential debate
  • US inflation data was mixed; core inflation rose
  • 25 basis point rate cut expected next week
  • Apple falls after iPhone unveiling
  • Oil rises on supply concerns after steep losses yesterday

Stocks fall as Harris wins the debate & US inflation is mixed

U.S. stocks are pointing to a weaker open on Wednesday as investors weighed up the heated debate between Donald Trump and Kamala Harris as well as US inflation data.

Headline CPI fell more than expected to 2.5% YoY in August, down from 2.9%. Expectations had been for a decline to 2.6%. However, core inflation unexpectedly rose on a monthly basis to 0.3% from 0.2%. The hotter-than-expected core CPI data blunts the case for an outsized Fed rate cut.

The market is now converging on a 25-basis-point rate cut from the Fed next week after traders dialed back expectations over a 50-basis-point cut. Overall, inflation looks well controlled, and there are no signs of deflation, keeping recession fears at bay.

The markets are also digesting the presidential election debate between candidates Donald Trump and Kamala Harris. The pair clashed on everything from immigration to the economy, but few policy details have been provided.

Heading into the event, Trump and Harris were neck and neck in the poles. However, in the immediate aftermath of the debate, Kamala Harris's odds of winning the ballot increased to 56% from 53% as she was seen as the winner.

Either way the debate has shown that the elections remain a risk for the markets and uncertainty is high.

Corporate news

Trump Media & Technology slumped after the debate between Trump and Harris, as Harris was seen as the winner.

GameStop is set to open over 9% lower after video game retailers said it would issue more shares despite posting a fall in second-quarter revenue. The firm said it would use the proceeds from up to 20 million new shares to fund general corporate purposes.

Dow Jones forecast – technical analysis.

The Dow Jones trades within a rising channel. The price ran into resistance at 41,582, the all-time high, and corrected lower. The 50 SMA has offered support, which s also the mid-point of the rising channel. Sellers supported by the bearish crossover on the MACD will need to break below the 50 SMA at 40,350 to extend losses towards the 40K psychological support and the 100 SMA at 39.7k. Should the 50 SMA hold, buyers will look to rise towards 41,580 and fresh all-time highs.

FX markets – USD holds rises, GBP/USD falls

The U.S. Dollar is rising after mixed US inflation data which supports the views that the Fed will cut rates by 25 basis points in the FOMC meeting next week.

EUR/USD is falling amid a stronger USD and ahead of tomorrow's ECB interest rate decision. The central bank is expected to cut interest rates by 25 basis points, taking the main rate to 3.5%.

GBP/USD is falling after UK GDP data showed the economy stagnated again in July. UK GDP was 0%, which was below the 0.2% forecast. The UK economy has stagnated in three of the past four months, which will be a blow to the newly elected Labour Party, which was counting on stronger economic growth to mend public finances.

Oil rises on supply concerns

Oil prices are rising 2% after a steep sell-off in the previous session. The price is finding support from a larger draw in US inventories as well as on supply concerns as a hurricane hits the Gulf of Mexico.

According to the latest API figures on Tuesday, US crude stocks fell by 2.79 million barrels, gasoline inventories declined by 513K barrels, and distillate inventories rose by 191 K barrels. The larger-than-expected draw provided some comfort to the oil market, which had fallen sharply on demand concerns in the previous session.

Meanwhile, concerns surrounding Hurricane Francine disrupting output in the US are also supporting prices. The storm has offline around 24% of crude production and 26% of natural gas output in the US Gulf of Mexico.

 

 

 

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