Dow Jones Forecast: DJIA finally at record highs, despite Middle East mixed messaging

US futures                                          

Dow futures 0.44%, S&P futures 0.25%  & Nasdaq futures 0.25%

In Europe                                                                        

FTSE 0.07% & DAX 0.8%

• U.S rise amid mixed messages from US-Iran and as yields fall
• Treasury yields fall to a weekly low
• Kevin Warsh to be sworn in as Fed Chair
• Oil rises but falls across the week

U.S. stocks at record highs as market weighs Middle East and falling yields

U.S. stocks are pointing to a modestly higher open ahead of the long weekend as investors continue to monitor developments in the Middle East.

Global markets have swung sharply on headlines surrounding the U.S.-Iran war since the conflict began in late February. Hopes of an eventual resolution, alongside continued optimism around the AI trade and resilient corporate earnings, have helped lift U.S. equities back towards record highs.

The Dow Jones Industrial Average was the last of the three major indices to reach a record closing high yesterday, while the S&P 500 and the NASDAQ-100 have been posting fresh record highs regularly since mid-April.

In the latest developments, it appears the U.S. and Iran are edging closer towards a deal, although both sides remain divided over Iran’s uranium stockpile and control of the Strait of Hormuz. These remain key sticking points that would need to be resolved before any agreement can be finalised.

Investors have remained focused on the inflationary impact of elevated oil prices, which have pushed bond yields higher globally and weighed on risk appetite. However, Treasury yields are easing back on Friday, with the 10-year yield falling towards a weekly low near 4.5%, helping improve sentiment slightly.

Later today, Kevin Warsh will be sworn in as the new Federal Reserve Chair, replacing Jerome Powell at a critical moment for U.S. monetary policy and the broader economy.

The S&P 500 is now on track for its eighth consecutive weekly gain, while the Dow Jones has risen in six of the past eight weeks.

Corporate movers

Estée Lauder is surging in pre-market trade after a potential merger with Spanish beauty group Puig fell through.

The proposed deal would have combined Estée Lauder’s luxury brands, including Clinique and Tom Ford Beauty, with Puig’s portfolio, which includes Charlotte Tilbury and Jean Paul Gaultier. Investors welcomed the collapse in talks, sending Estée Lauder shares 11% higher, while Puig is down 13%.

Dow Jones – technical analysis

The Dow Jones broke above its rising trendline resistance, validating the breakout from the rising wedge pattern and climbing towards 50,500, matching the record high reached in February.

Buyers will look for a move above this level to extend gains towards 51,000 as the next logical upside target.

Immediate support sits at 50,300 around the rising trendline support, while below here the 50,000 psychological level comes into focus. A break below 49,300 would move the price back beneath the rising wedge pattern and could open the door towards 49,000.

FX markets – USD rises EUR/USD falls

The U.S. dollar is edging higher and remains on track for modest gains across the week, trading around multi-week highs supported by resilient U.S. data and continued uncertainty surrounding U.S.-Iran negotiations.

EUR/USD is little changed despite German data showing a modest improvement in business sentiment. The IFO business climate index rose to 84.9 in May from 84.5 previously. While the data points to improving sentiment, confidence levels remain historically weak. Separately, ECB policymaker Alexander Di Marco said the central bank may still need to raise rates at its June meeting.

GBP/USD is drifting lower after UK retail sales fell at their fastest pace in almost a year as higher petrol prices weighed on consumer spending. Retail sales volumes dropped 1.3% month-on-month in April, the largest decline since May 2025 and well below expectations for a 0.6% fall. Even so, sterling remains on track for gains of around 0.7% across the week.

Oil rises but remains on track for a weekly decline

Oil prices are moving higher on Friday amid doubts over whether a breakthrough in U.S.-Iran peace talks can be reached soon. Even so, crude remains on track for weekly losses, with WTI down around 5% on the week and Brent lower by roughly 4%.

While a senior Iranian official said the gap between Tehran and Washington had narrowed, and U.S. Secretary of State Marco Rubio pointed to some encouraging signs, both sides remain divided over Iran’s uranium stockpile and future control of the Strait of Hormuz.

The conflict has disrupted around 14 million barrels per day of oil supply, equivalent to roughly 14% of global production. Even if the conflict were resolved immediately, oil flows are unlikely to fully normalise before 2027.