Dow Jones Forecast: DJIA steady after jobs data, ISM services up next

US futures

Dow future -0.15% at 40910

S&P futures 0.12% at 5525

Nasdaq futures 0.17% at 18947

In Europe

FTSE 0.04% at 8264

Dax 0.27% at 18648

• Stocks steady after steep losses this week
• US ADP payrolls fall to 99k from 11k
• US ISM services data up next
• Oil sell off steadies on inventory data, OPEC supply

Stocks steady after ADP payrolls, jobless claims

U.S. stocks are muted after steep losses earlier in the week and as the market digests the latest U.S. economic data ahead of tomorrow's nonfarm payroll report.

ADP private payrolls unexpectedly fell to 99,000 in August, down from a downwardly revised 111,000 in July and well below expectations of 145,000. However, jobless claims painted a more mixed picture, with initial claims rising to 230,000, although continuing claims were lower.

The data comes after Jolts job openings yesterday showed that the number of job openings fell to a 3.5-year low and as manufacturing data earlier in the week raised concerns of an ongoing contraction in the sector.

Data this week shows that the market has raised expectations that the Federal Reserve will cut interest rates by an outsized 50 basis points in the September meeting rather than for a 25-basis-point hike. The market is pricing in 110 basis points worth of Fed rate cuts in 2024.

This is a lot of rate cuts in a short amount of time, and the market is sensitive to the idea that the US economy could be heading for a hard landing.

Attention will now turn to ISM services PMI data for more clues about the health of the economy. Weaker than forecast data could pull stocks lower.

Corporate news

Nvidia has stabilized after falling 11% in the previous two sessions. The AI chipmaker stated that it did not receive a U.S. Department of Justice supboena. The stock has fallen sharply in recent sessions after a Bloomberg report and amid the steep selloff in tech stocks.

United States Steel rose 2.1% after suffering 17% losses in the previous session. The company's shares rose following a report that President Joe Biden is set to block Japan's Nippon Steel's $14.9 billion takeover due to national security concerns.

C3 AI fell 19% after the AI software firm’s quarterly subscription revenue missed estimates as companies tighten spending amid economic uncertainties.

Dow Jones forecast – technical analysis.

The Dow Jones trades within a rising channel. The price fell away from the ATH  of 41,580, testing the short-term falling trendline. Buyers will look to extend gains back up towards the 41,500 and fresh ATHs. Sellers will need to take out support at 40,800 the September low to bring 40,000 into focus.

FX markets – USD steady, EUR/USD falls

The U.S. dollar is falling after weaker-than-expected ADP payrolls fueled expectations of an outside Fed rate cut in the September meeting.

EUR/USD is rising, benefiting from the weaker U.S. dollar, and after encouraging euro zone data. Eurozone retail sales rebounded in July, rising 0.1% after a -0.4 decline in June. Meanwhile, German factory orders also unexpectedly increased for a second straight month. Demand rose 2.9% in July ahead of forecasts of a 1.7% drop.  

USD JPY is falling for a third straight day as the yen continues to benefit from safe-haven flows amid fragile market sentiment and after hawkish Bank of Japan commentary. Have policymakers in Japan reiterated their desire to hike interest rates further in the coming months?

Oil steadies after steep losses

Oil prices are holding steady after sharp losses in the previous sessions.

The selloff has stalled after dropping by 6% in the previous setting on two days, rising on a possible delay to output increases by OPEC producers and by a decline in US inventories.

Figures from the API Institute showed that US crude oil inventories fell by 7.43 million barrels, well ahead of the expected 1 million barrel draw.

Further support for oil came from discussions between OPEC+ countries about delaying the output increase which was expected to start in August. The oil cartel was going to proceed with a 180,000 barrel increase per day from October as part of a gradual unwinding of its recent supply cuts.

However, volatility in the markets, caused by soft demand in China, concerns over the US outlook and the end of a dispute in Libya, has caused OPEC+ to reconsider.

Oil prices have come under pressure in recent days due to concerns over a hard landing in the US.