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Dow Jones Forecast: Stocks slip with bonds in focus after jobs data

Article By: ,  Senior Market Analyst
October 5, 2023 2:08 PM

US futures

Dow futures -0.21% at 33030

S&P futures -0.22% at 4251

Nasdaq futures -0.15% at 14749

In Europe

FTSE +0.6% at 7458

Dax +0.02% at 15097

  • US jobless claims rise to 207k from 205k
  • US bond yields climb higher fueling fears of a hard landing
  • USD holds steady after data
  • Oil slumps for a second day

US jobless claims remain low

US Stocks are pointing to a modestly weaker open after gains in the previous session and as investors digest the latest cues from the US labour market.

US jobless claims showed that 207k Americans filed for unemployment benefits for the first time last week, which was up from 205k the previous week but slightly below the 210k expected and remain low by historical standards. The data comes after yesterday's ADP private payroll which showed 89,000 jobs were added in September, well below estimates of 160k and down from 180k previously.

Yesterday’s figure revived hopes that the US labour market could be cooling which could encourage the Federal Reserve to adopt a less hawkish tone and question rate hikes this year.

Investors will be keeping an eye on sovereign bond yields as both the 10-year and the 30-year treasury yields inched higher, suggesting that yesterday's rally in the bond market could be short-lived. Concerns are rising that the sharp rise in bond yields in recent weeks could take its toll on some parts of the financial system.

Looking ahead attention will be on fed speakers with Cleveland Fed President Loretta Mester due to speak along with Mary Daly and Barkin.

Corporate news

Constellation Brands is set to open unchanged despite the drinks maker lifting its annual profit guidance after Q2 sales beat forecasts.

Exxon is falling 1.2% pre-market as oil prices drop, but the oil giant also said it would deliver Q3 operating profit between $8.3 billion and $11.4 billion, which was below last year's record earnings although up from Q2

Blackberry is rising pre-market after the tech firm announced that it would separate its Internet of Things and cybersecurity business units. It plans an IPO for the Internet of Things business next fiscal year.

Dow Jones forecast – technical analysis.

The Dow Jones has risen from yesterday’s low of 32815 and while the RSI remains in oversold territory, the rebound is lacking momentum. Buyers would need to retake 33220, Monday’s low to build confidence in a recovery and extend gains 33600 the July low and expose the 200 sma at 33820. Sellers will be looking to take out support at 32815 to create a lower low and extend the bearish trend towards 32675 the May low.

FX markets –USD falls, EUR rises

The USD is falling lower for a second straight day as yields steady and as investors digest the latest jobless claims data and look ahead to US non-farm payroll figures tomorrow.

EUR/USD is rising, capitalising on the weaker U.S. dollar even as investors digest more disappointing data. German exports plunged by -1.2% in August after falling 1.9% in July, highlighting the weakness in the eurozone's largest economy. Meanwhile, French industrial output also unexpectedly declined by 0.4%. ECB policymaker Peter Kazimir said that the rate hike last month was likely the last although more data is needed to confirm this.

GBP/USD is holding steady around 1.2125 after gains in the previous session. GBP is managing to brush off data that showed the construction in industry saw the biggest slide in activity in more than three years. The construction PMI fell to 45 in September, down from August's 50.8. This was one of the sharpest falls in housebuilding since the 2008-2009 recession.

EUR/USD +0.09% at 1.0505

GBP/USD -0.08% at 1.2124

Oil slumps further

Oil prices are falling further, extending yesterday's slide, which saw oil prices fall by over 5% as concerns over the demand outlook overshadow the prospect of ongoing tight supply from OPEC.

Oil fell a 5% on Wednesday marking its largest daily decline in over a year, as concerns over the deteriorating economic outlook and weaker oil demand pulled oil prices lower even though Saudi Arabia and Russia reiterated that they will continue the voluntary output cuts until the end of the year.

US service sector PMI data slowed in September and ADP payrolls dropped sharply. Data from the eurozone was also weak and pointed to a likely contraction in the third quarter and a possible recession in the second half of the year. As economies, the oil demand outlook weakens pulling oil prices lower.

WTI crude trades -1.5% at $81.99

Brent trades -1.5% at $84.35

Looking ahead

14:00 Fed Mester

15:00 Cad. Ivey PMI

16:30 Fed Barkin

 

 

 

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