Dow Jones Forecast: DJIA falls further as oil prices rise further above $100

US futures        

Dow futures -0.33% S&P 500 futures 0.55%  & Nasdaq futures  -1%

European futures

FTSE -0.25%,  DAX  -0.36%

• US stocks fall after hotter-than-expected PPI data
• Rising oil prices lift inflation concerns further
• September Fed rate hike expectations rise to 70%
• Oil continues rising above $100

U.S. Stocks Fall as Hotter PPI Lifts Fed Rate Hike Expectations

U.S. stocks are falling sharply as oil prices continue to climb above $100 a barrel and after hotter-than-expected PPI inflation data.

The data showed that producer price inflation rose 5.4% year-on-year in August, ahead of estimates of 5.3%. On a monthly basis, it rose 0.4%, in line with estimates and up from 0% in July, marking the largest increase in three months as energy prices surged.

Core PPI, which excludes more volatile items such as food and fuel, rose to 4.6% year-on-year, up from 4.3%. This suggests that even the more stable measure of underlying price trends is moving higher.

The data suggests that cost pressures in the economy are rising and could feed through into higher consumer price inflation, strengthening expectations that the Federal Reserve may need to keep interest rates higher for longer or raise them further.

Expectations for a September rate hike have risen to 70%, up from 60% prior to the reading.

This comes alongside oil prices rising further above $100 a barrel, keeping inflationary concerns elevated and pushing Treasury yields higher.

All eyes are now on tomorrow’s CPI data for fresh clues over the Fed’s likelihood of raising rates next month. A hotter-than-expected reading could further lift rate hike expectations and Treasury yields, putting additional pressure on equities, while cooler inflation could ease some of that pressure.

Corporate Movers

Macy’s posted a Q2 revenue beat and lifted full-year guidance for net sales. However, shares are falling.

Meta Platforms is rising 1.4% following an upgrade by JPMorgan, which said it sees meaningful upside potential as Meta rolls out its AI models and products.

Apple is rising 1% after unveiling its foldable iPhone and other products. However, investor response was muted on Wednesday.

Copper miners are falling alongside the price of copper. The threat of tariffs had pushed the metal price to a record high. Freeport-McMoRan is down 7%, while Southern Copper is falling around 6%.

Dow Jones Forecast – Technical Analysis

The Dow Jones has broken below its rising trend line support and its 50 EMA which, combined with the RSI below 50, keeps sellers hopeful of further downside.

Sellers will look towards 52,000, the round number, and the 100 EMA at 51,830 before turning attention to 51,500, the July low. A break below here exposes the 200 EMA at 50,200.

Any recovery would first need to rise above the 50 EMA at 52,800, stabilising the price action before attention turns to 53,800, the August high. A rise above here would bring attention back to 54,750 and fresh record levels.

FX Markets – Dollar Rises, EUR/USD Falls

The USD is jumping after U.S. PPI inflation came in hotter than expected, keeping inflation concerns and Fed rate hike expectations front and centre ahead of tomorrow’s CPI data.

EUR/USD is falling despite the ECB hiking interest rates by 25 basis points as expected. The central bank also raised its inflation forecasts for 2027 and 2028, while raising its GDP forecast for next year. Markets have viewed the projections as slightly more hawkish, supporting the case for further hikes. Two hikes are now fully priced in by March.

GBP/USD is falling amid U.S. dollar strength, while the 10-year British gilt yield has reached its highest level in almost 19 years amid rising oil prices and broader global yield trends. However, higher borrowing costs put Chancellor Healey in a difficult position ahead of next month’s Budget.

Oil Keeps Rising Above $100

Oil prices are trading higher on Thursday, up around 1%, with Brent rising to $102 a barrel while WTI pushes towards $97.50.

Brent has now rallied 30% from the early August lows as the ceasefire agreement between the U.S. and Iran collapsed and fighting resumed. The conflict is lasting longer than the market had anticipated, raising concerns over oil supply and exports and keeping the market tight.

Trump warned that the war will likely last beyond November’s midterm elections.

Meanwhile, Iran said it attacked 10 ships near the Strait of Hormuz on Wednesday, with transit along the key waterway now largely stalled.

Pressure is also mounting in the Red Sea as Iran-aligned Houthi militants step up strikes against Saudi Arabia.

Fears of prolonged disruption have lifted Brent above $100 a barrel, adding another inflationary pressure point for markets just as investors await the latest U.S. CPI data.

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