Dow Jones Forecast: Stocks rise for a 10th straight session

US futures

Dow futures +0.25% at 35319

S&P futures +0.46% at 4555

Nasdaq futures +0.65% at 15570

In Europe

FTSE +0.3% at 7673

Dax -0.23% at 16160

• 73% of S&P 500 companies that have reported beat forecasts
• American Express beats forecasts
• Attention shifts to the FOMC next week
• Oil set for 4^th straight weekly rise 

Dow set for best winning run since 2017

US stocks are pointing to a stronger start, with the Dow Jones set to extend its winning run into a 10^th straight session. This would mark the longest winning stretch since 2017 as investors digest the latest batch of corporate earnings and look ahead to the Federal Reserve interest rate decision next week.

Corporate earnings have been mixed so far, with 73% of the S&P 500 companies that have reported, beating forecasts according to the latest data from FactSet. This is below the 3-year average of 80% but perhaps not as bad as initially feared. Still, it is early days.

Banks have reported and have benefitted from rising interest rates, although some have suffered from a marked decline in deal-making.

Attention is now switching to tech stocks, with the likes of Meta, Microsoft, and Apple set to report.

The Nasdaq is set to outperform on the open after falling 2% yesterday after investors were disappointed by Tesla and Netflix.

Attention will also turn to the FOMC rate decision on Wednesday where the Fed is widely expected to raise interest rates by 25 basis points and could signal a pause.

Corporate news

American Express posted higher than expected earnings in Q2 with EPS of $2.89 ahead of the $2.81 forecast. Total revenue rose 12% to $155.05 billion.

Dow Jones forecast – technical analysis

The Dow Jones rebounded off the 50 sma and broke out of the ascending triangle, hitting a high yesterday of 35370. The RSI has tipped into overbought territory, so buyers should be cautious. Resistance can be seen at 35490, the April 2022 high, ahead of 35875, the February 22 high. On the downside, support can be seen at 34940, the December high, with a break below here opening the door to 34500, the June high.

FX markets – USD rises, GBP falls

The USD is edging higher for a fourth straight session, boosted by yesterday’s encouraging jobless claims data and ahead of the FOMC meeting next week.

EURUSD is holding steady amid a lack of fresh catalysts and as traders look ahead to the ECB rate decision next week. The central bank is set to raise interest rates by 25 basis points as its fight against inflation continues.

GBPUSD is falling as the boost from retail sales proves to be short-lived. UK retail sales jumped 0.7% MoM up from 0.3% in May and ahead of the 0.2% forecast, boosted by the warm weather. However, consumer sentiment fell for the first time in 6 months, suggesting that the strong run in retail sales could soon end.

EUR/USD -0.04% at 1.1120

GBP/USD -0.35% at 1.2825

Oil set for weekly rise

Oil prices are rising for a second straight day and are on track to rise across the week marking the fourth straight week of gains increase.

News that China, the world's largest crude oil importer, will roll out more stimulus measures to support its faltering economy after lifting oil prices.

Following disappointing Q2 GDP data earlier in the week, Beijing has unveiled new measures to boost consumption. Optimism is rising that further support measures will be announced soon.

Rising hopes that the US could avoid a hard landing are also supporting the oil demand outlook. Several major investment banks have downwardly revised the likelihood of a recession in the US later this year or early next year.

A strong USD and some caution ahead of next week's Federal Reserve interest rate decision could limit the upside in oil. The dollar has rebounded from a 15-month low.

Baker Hughes, oil rig data is due later today.

WTI crude trades +0.4% at $75.65

Brent trades  +0.45% at $79.75

Looking ahead

15:00 Eurozone consumer confidence

15:00 US existing home sales