Dow Jones Forecast: DJIA trades quietly above 40k ahead of Jackson Hole

US futures

Dow future 0.11% at 40694

S&P futures 0.9% at 5564

Nasdaq futures 0.13% at 19539

In Europe

FTSE 0.30% at 8334

Dax 0.3% at 18391

Stocks edge higher after a stellar previous week
Jerome Powell speaks at Jackson Hole this week
Oil falls on China demand worries

Stocks inch higher after substantial gains last week

U.S. stocks point to a quiet open after stellar gains in the previous week and as investors look ahead to Federal Reserve chair Jerome Powell's speech at Jackson Hole on Friday.

Cooling US inflation combined with solid retail sales and consumer confidence data last week helped to calm recession fears and saw the S&P 500 book the strongest weekly performance so far this year. Meanwhile, the Dow Jones topped 40,000 once again. The gains came after a rout across global markets at the start of the month sparked by an increase in the US unemployment rate in July, which fueled recession fears.

Goldman Sachs lowered the odds of the US falling into recession to 20%, down from 25%.

The minutes from the Federal Reserve's policy meeting could provide further clues about the central bank's outlook for interest rates.

This week's attention will be on Federal Reserve Jerome Powell's speech at Jackson Hole on Friday. He is expected to signal the start of rate cuts in September, moving the conversation from “when will the Federal Reserve start to cut rates” to “how deep the Fed will go in this rate-cutting cycle.”

Also, this week, attention will be on politics, as the Democratic convention is expected to support Kamala Harris's presidential candidacy further.

Corporate news

Estee Lauder is set to open over 3.5% lower after the long-serving CEO of 15 years, Fabrizio Freda, announced plans to retire next year. The news comes as the company is in the process of a turnaround plan, cutting back the workforce to support margins.

Advanced Micro Devices (AMD) is set to rise over 2.5% after the chipmaker said it plans to acquire server maker ZT Systems for $4.9 billion. The acquisition will allow AMD to expand its portfolio of AI chips and hardware.

Palo Alto Networks is due to reports after the bell and is expected to post revenue growth of $2.16 billion, up from $1.95 billion in the same quarter last year. Net income is expected to reach $232.9 million or $0.66 per share. The market will be keen to see whether the company is capitalizing on the recent outage of its rival crowd.

Dow Jones forecast – technical analysis.

The Dow Jones has recovered from its August low of 38,400, rising above the 100 & 50 SMA and 40k. This, combined with the RSI above 50, keeps buyers optimistic of further upside. Buyers will look to rise above 41k and 41.4k to fresh all-time highs. On the downside, support can be seen at 40k.

FX markets – USD falls, EUR/USD rises

The USD is falling, extending losses from the previous week on expectations that the Federal Reserve could signal the start of rate cuts in September. While today's economic calendar is quiet, attention will be on Fed official Christopher Waller, who is due to speak.

EUR/USD rose to 1.1050, a fresh 2024 high, in early trade and, while it has eased from this level, remains in positive territory. The EUR is capitalizing on the weaker U.S. dollar and expectations that the Fed will start cutting rates soon. The last ECB is expected to adopt a more gradual approach to reducing rates after cutting rates by 25 basis points in June.

USD/JPY has fallen over 1% at the start of the week, pairing last week's gains with the Fed-BoJ interest rate outlook in focus. This week, Fed chair Jerome Powell is expected to signal toward a rate cut in September. Meanwhile, the BoJ governor, who is scheduled to speak on Friday, could adopt a more hawkish tone.

Oil falls on China demand concerns.

Oil prices are falling at the start of the week, extending losses from the previous week amid ongoing concern over the demand in China and amid progress in Middle Eastern ceasefire talks.

Recent weak data from China has raised concerns surrounding the oil demand outlook in the world's largest oil importer. July diesel exports slumped to a one-year low as refiners slashed output due to weak demand.

Separately, US Secretary of State Anthony Blinken flew to Israel at the weekend to push ceasefire talks between Hamas and Israel. An agreement would reduce the risk premium on oil supply.

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