Nasdaq Forecast: NDX extends gains after cooler PPI

US futures        

Dow futures 0.27%, S&P futures 0.34%  & Nasdaq futures 0.68%

European futures

FTSE 0.10%,  DAX -0.46%

• US stocks extend gains after PPI cooled -0.3% MoM
• The market lowers Fed rate cuts further
• ASML beats, IBM extends losses
• Oil rises 12% this week as US-Iran

U.S. Stocks Extend Gains After Softer PPI Reinforces Inflation Cooling

U.S. stocks are extending gains after cooler-than-expected producer price inflation, a day after consumer price data also surprised to the downside, reinforcing expectations that inflationary pressures are easing.

U.S. producer prices rose 5.5% year-on-year, down from 6.5% previously, while on a monthly basis PPI fell 0.3%, following a 0.6% increase in May.

The report suggests that lower energy costs continue to help ease pipeline inflation pressures. The figures follow yesterday's CPI report, which showed consumer prices fell on a monthly basis for the first time in six years.

However, the improvement in inflation may prove temporary. Renewed hostilities between the U.S. and Iran have pushed oil prices around 12% higher this month, raising the risk that higher energy costs could feed back into inflation. At the same time, tariffs and tighter immigration policies could also add to price pressures over the coming months.

Even so, investors have continued to scale back near-term Federal Reserve rate hike expectations. Markets no longer expect a July rate increase and now see roughly a 50/50 probability of a September hike, down sharply from around 78% before yesterday's CPI report.

Attention now turns to Federal Reserve Chair Kevin Warsh, who is due to testify for a second day before Congress. During yesterday's testimony, Warsh reiterated the Fed's commitment to returning inflation to its 2% target, while warning it was too early to declare victory.

Corporate Movers

ASML is rising 3% after the Dutch semiconductor equipment maker posted quarterly results that beat expectations and raised full-year guidance, supported by continued strength in AI-related demand.

IBM remains under pressure after tumbling 25% yesterday in one of its worst sessions on record following a profit warning, as customers redirected spending away from software towards AI infrastructure and memory hardware.

Morgan Stanley is up 1.5% after reporting record quarterly revenue and profit. EPS came in at $3.46, comfortably ahead of expectations for $2.94.

Johnson & Johnson is slipping 1% despite beating forecasts. The healthcare giant reported EPS of $2.90, ahead of the $2.85 consensus, while revenue of $25.31 billion also exceeded expectations.

BlackRock is rising more than 4% after reporting stronger-than-expected earnings. The asset manager posted EPS of $13.91, well above the $12.59 forecast, while revenue also exceeded forecasts.

Nasdaq Forecast – Technical Analysis

The Nasdaq continues to trade within a symmetrical triangle pattern.

The index has recovered from the 29,100 low, moving back above the 50-day SMA, and is now testing resistance at the falling trendline around 29,800.

A break above this level would signal an upside breakout from the triangle, bringing 30,000 into focus, followed by 30,300, the July high. A rise above here opens the door to the 30,650 resistance zone and fresh record highs.

Initial support is located at the 50-day SMA around 29,600. A break below 29,100 would complete a downside breakout from the triangle and expose 28,300, the June low.

FX Markets – Dollar Falls

The U.S. dollar remains under pressure following today's softer-than-expected PPI report, adding to yesterday's weaker CPI data.

The greenback fell sharply yesterday and is extending those losses today. The key question for markets is whether rising oil prices will be enough to revive inflation concerns and reverse some of the recent weakness in the dollar.

EUR/USD is rising alongside the softer dollar despite disappointing eurozone industrial production. Output fell 0.2% in May, compared with expectations for a 0.2% increase, while factory production declined 1.2% after rising 0.2% previously.

GBP/USD has climbed back towards 1.34 as broad U.S. dollar weakness offsets renewed geopolitical uncertainty. Markets now expect the Bank of England to raise rates by November, with another increase potentially following in March 2027.

Oil Rises as U.S.-Iran Hostilities Escalate

Oil prices are rising for a third straight day, taking weekly gains to around 12%, after President Trump reimposed a naval blockade on Iranian ports and Tehran has threatened retaliation.

Crude is trading at a monthly high amid renewed concerns over supply through the Strait of Hormuz. Markets are also increasingly worried Iran could use its Houthi allies in Yemen to disrupt shipping through the Bab el-Mandeb Strait, potentially restricting another key route for global energy supplies.

According to Goldman Sachs, Gulf exports had recovered to around 80% of pre-conflict levels following June's memorandum of understanding but have since fallen back below 50% over the past week. The bank estimates Brent crude could rise above $110 per barrel in Q4 if current disruptions persist.