Dow Jones Forecast: DJIA stocks drift higher amid a light calendar

US futures

Dow futures 0.45% at 39490

S&P futures 0.53% at 5234

Nasdaq futures  0.63% at 18333

In Europe

FTSE 0.19% at 7933

Dax +0.73% at 18400

• Stocks edge higher after 3 days of losses
• Fed Governor Waller in focus amid a quiet calendar
• AI stocks rise again, GameStop drops
• Oil falls after inventories rise

Fed Governor Waller in focus amid a quiet economic calendar

US stocks are pointing to a positive start on Wednesday amid light trade and AI stock gains ahead of key data on the Good Friday holiday.

The indices are recovering from losses in the previous session when the Dow and the S&P 500 posted the third straight daily decline.

Today, with a light US economic calendar, all eyes are on Federal Reserve governor Christopher Waller, who is scheduled to speak at the Economic Club of New York later.

Given that Waller is broadly considered a hawk, the market will be watching closely to see his reactions to recent data – particularly inflation, which has been stickier than expected for the past two months and signs of resilience in the economy.

Otherwise, the attention will be on Friday's core PCE index, the Fed's preferred gauge for inflation, which comes out when the US stock market is closed for Good Friday. The closure of the stock market on Good Friday means that investors will not be able to react to the inflation data immediately, potentially leading to increased volatility when the market reopens. Fed Chair Jerome Powell will also speak on Friday. Combined, these events could give the market further insight into the Fed’s plans for interest rates.

Ahead of Friday’s inflation, US Q4 GDP data, University of Michigan consumer sentiment, and weekly jobless claims data are due tomorrow.

As we approach the end of the first quarter, it's worth noting that the indices have shown robust performance. This can be attributed to an AI-inspired rally and the prevailing optimism that the Federal Reserve will initiate interest rate cuts later in the year. This positive trend could potentially impact the markets as we enter the new quarter.

The market is still pricing in around a 70% probability that the Fed will start cutting interest rates in June.

Corporate news

GameStop is set to open at around 18% lower after the video game retailer posted weaker Q4 revenue and announced job cuts to reduce costs.

Nio is set to fall on the open after downwardly revising its Q1 delivery forecast. The EV maker now expects to deliver 30,000 vehicles in the first quarter, down from a previously guided 31,000 to 33,000. They cited sluggish Chinese demand as the reason for the downgrade.

Dow Jones forecast – technical analysis.

The Dow Jones fell back from its record high of 39894 reached last week and found support at 39284, the February high. Should bulls extend the rebound, a test of 39894 could open the door to fresh all-time highs and 40,000. Meanwhile, sellers will want to break below 39284 to extend losses towards 38,450, the March low.

FX markets – USD rises, EUR/USD falls

The U.S. dollar is rising for a third straight day, boosted by dovish signals from other central banks and amid signs of resilience in the US economy.

EUR/USD is trading under pressure despite improving eurozone consumer confidence and higher Spanish inflation. Inflation in the eurozone's fourth largest economy was 0.8% in March, double the 0.4% gain in February. Meanwhile, consumer confidence ticked higher to -14.9, up from -15.5. The increase in consumer confidence comes despite signs of stagnation in the eurozone economy.

GBP/USD  is falling despite the Bank of England reported that problem debts in the UK were holding up better than in the 2008 financial crisis, suggesting that businesses and households were coping better with the higher rate of the higher interest rates. The comments come after Bank of England policymaker Catherine Mann said yesterday that she believed the market was expecting more interest rate cuts than the central bank could give.

Oil falls as inventories rise

Oil prices are falling for a second straight day, dropping over 1% today after rising crude oil stockpiles and amid signs that the OPEC+ group will likely stick with its current production cuts at the next meeting.

OPEC+ is not expected to make any major oil output policy changes until a full ministerial meeting in June. The group has a technical meeting next week, during which policy is likely to be kept unchanged. Earlier this month, the group agreed to extend its voluntary output cuts of 2.2 million barrels per day until the end of June.

According to API data, US crude inventories rose by 9.3 million barrels in the week ending March 22, while gasoline stops dropped by 4.4 million barrels. Official EA US create stop Paula data will be released today.