Dow Jones Forecast: DJIA slumps on pullback worries

US futures                                         

Dow futures -0.8%, S&P futures -1.14%  & Nasdaq futures -1.4%

In Europe                                                                        

FTSE -0.27% & DAX -1%

• Stocks fall amid worries over lofty valuations
• Wall Street CEOs warn of a market pullback
• Palantir falls 7% after earnings, following a 400% rally this year
• Oil falls on supply worries & amid a stronger USD

Stocks rise with earnings & ISM manufacturing data due

US stocks are falling sharply amid concerns over lofty tech valuations and as CEOs at Wall Street banks warn of a market pullback.

Wall Street indices reached record highs last week and booked impressive gains for October as quarterly reports from Big Tech signaled soaring AI investments, which have helped power stocks to record levels.

However, doubts are starting to creep in about the tangled web of deals centered on OpenAI and the circular nature of its spending and monetization. Investors are booking profits after a record rally to take a safer view from the sidelines.

The U.S. government shutdown is continuing and likely to become the longest on record. Private data is a key focus for investors and the Fed alike.

Yesterday, the US manufacturing ISM showed a deeper-than-expected contraction. Attention is now turning to tomorrow's ADP private payroll report for further insight into the health of the US labour market, particularly amid recent weakness.

Fed speakers have given conflicting indications over the next step for interest rates. Chicago Fed President Austin Gooldsmith said he was on the fence about cutting in December, given that inflation was still far above the central bank's target. Meanwhile, Steven Miran said the current monetary policy was too restrictive. Traders are pricing in a 68% chance of a 25 basis point rate reduction in December, down from 90% ahead of last week's

Corporate news         

Palantir Technologies is falling 7% after fiscal Q4 earnings and revenue beat estimates, and it raised current-quarter and full-year revenue guidance. However, the stock had jumped 20% over the past month and 400% over the past year, suggesting investors are now booking profits.

With renewed focus on chip stocks, AMD will report after the closing bell. Expectations are for

Uber is falling 5% after saying Q4 earnings will range between $2.41 billion and $2.51 billion, versus $2.47 billion expected. Q3 revenue beat Wall Street's expectations at $13.47 billion versus $13.28 billion expected.

Spotify is up 5% after earnings, with user growth beating forecasts. EPS rose to €3.28, up from €1.45 in the same period last year, and Q3 revenue rose to €4.27 billion, ahead of the €4.23 billion expected.  User growth rose 11%.

Dow Jones forecast – technical analysis.

The Dow Jones ran into resistance at its record high of 48,000 before easing back to its October 3 high of 47,000. A recovery from this support level could see a retest of the 48,000 buy level. Short-term pull-backs are still buying opportunities as the long-term uptrend remains intact. Below 47,000, support is seen around 46,350, the rising trendline, and the 50 SMA.

FX markets – USD rises, GBP/USD falls

The U.S. dollar is rising to a three-month high, as the chances of another Fed rate cut in December have fallen considerably since last week’s FOMC meeting, amid safe-haven flows and deteriorating market sentiment.

EUR/USD is falling amid a stronger USD, hitting a three-month low, pulled lower by risk aversion and a lack of high-impact data from either the EU or the US. Yesterday, EZ manufacturing PMI rose to 50, the level that separates expansion from contraction.

GBP/USD has tumbled to a 7-month high and a multi-year low versus the euro as Chancellor Rachel Reeves paves the way for tax hikes in the November budget, which could slow an already stagnant economy. Just weeks ago, traders saw no possibility of a Bank of England rate cut this month; however, that has risen to 30%, as inflation was cooler than expected.

Oil falls for a second day

Oil prices are falling for a second straight day amid oil supply concerns and on a weaker USD.

Oil prices have dropped 2% so far this week after OPEC+ announced an agreement to increase oil output by 137,000 barrels per day in December, while also pausing output hikes in the first quarter of next year.

Meanwhile, weaker-than-expected US manufacturing data has hurt the demand outlook. US manufacturing PMI fell deeper into contraction. This came hot on the heels of weaker-than-expected Chinese manufacturing activity, raising concerns about the demand outlook in the two countries, the world's largest oil consumers.

The US dollar is trading at a three-month high amid a divided Fed over whether. A Stronger U.S. dollar makes U.S. dollar-denominated commodities more expensive for buyers with other currencies.