Dow Jones Forecast: DJIA rises with inflation data & earnings in focus

US futures                                         

Dow futures 0.33%, S&P futures 0.17%  & Nasdaq futures -0.13%

In Europe

FTSE 0.28% & DAX 0.34%

• US stocks rise after cooler PPI
• Trade developments in focus after Indonesian deal
• Semiconductor equipment makers fall after ASML warning
• Oil falls for a third day

Fed outlook in focus

US stocks opened higher on Wednesday following cooler-than-expected wholesale inflation data, which has reinforced expectations that the Fed could cut interest rates this year.

Wholesale inflation as measured by the PPI rose 2.3% on an annual basis, below the 2.5% increase forecast. On a monthly basis, PPI remained flat compared to the expected 0.2% rise.

The data has helped ease the mood following yesterday's consumer price inflation data, which rose to 0.2% from 0.1%, raising concerns that Trump's tariff policy was adding inflationary pressure.

The market is currently pricing in a 56% probability of a 25-basis-point rate reduction in September, up from 50% prior to today's release, reflecting changing expectations surrounding the Fed’s outlook.

Trade tensions also remain in focus after Trump announced a 19% tariff on Indonesian goods as part of a new deal. The August 1st deadline remains a key date for broader tariff hikes. However, investors have shown resilience in recent weeks with U.S. stocks closing at record highs on Tuesday after NVIDIA surged following plans to resume sales of H20 AI chips.

Corporate news

US semiconductor equipment makers were down after ASML warned that it may not achieve growth next year due to uncertainty surrounding the US tariffs. Applied Materials and Lam Research were down 2.8% respectively.

Bank of America is rising by over 1% after its profits increased in Q2, as its traders benefited from the volatile markets in the second quarter. Yesterday, JP Morgan and Citigroup both posted better-than-expected results.

Dow  Jones forecast – technical analysis

The Dow Jones fell away from 44,880, dropping to 44,000 support and the 20 SMA. The price continues to trade above the rising trendline dating back to April. Buyers will look to recover towards 44,500 and on to 45,000. Sellers will need to take out 44,000 and therising trendline around 43,500 to fuel a deeper selloff towards 42,800.

FX markets – USD rises, EUR/USD falls

The USD is rising, extending its recovery from the multi-year low at the start of the month. Investors are buying back into the USD amid reduced expectations for Fed rate cuts this year..

The EUR/USD is falling as the market continues to look for developments in EU-US trade talks ahead of the August 1^st deadline. The eurozone economic calendar is light.

GBP/USD remains unchanged at 1.34 despite hotter-than-expected UK inflation. UK CPI rose to 3.6% year on year, up from 3.4%. The rise in inflation is a result of government policies. However, the BoE has indicated that it may be more concerned about the jobs market weakening. UK unemployment figures are out tomorrow.

Oil falls for a third day

Oil prices are falling for a third straight session, as signs of stronger Chinese crude consumption were overshadowed by broader concerns over the impact of U.S. trade tariffs.

Oil prices have remained in a relatively tight range as concerns over the impact of U.S. trade tariffs on partners, which are expected to slow the economy, overshadow signs of steady demand from rising travel in the Northern Hemisphere.

The EU and the US are yet to announce a deal ahead of the August 1st deadline, and Trump also threatened severe tariffs on Russia in 50 days if there is no deal to stop the Ukraine war.