Dow Jones Forecast: DJIA slips as oil jumps & tech earnings come into focus

US futures        

Dow futures 0-0.1%, S&P futures -0.4%  & Nasdaq futures -0.9%

European futures

FTSE 1.5%,  DAX 0.72%

• US fall, led lower by tech
• Alphabet, Texas Instruments & Tesla to report earnings
• US -Iran conflict deepens
• Oil rises towards $95 on Middle East conflict and supply worries

U.S. Stocks Fall Ahead of Big Tech Earnings

U.S. stocks are falling on Wednesday ahead of key earnings, which could provide further clues on the AI trade, while rising oil prices continue to weigh on sentiment as the conflict in the Middle East deepens.

The tech-heavy Nasdaq is leading the losses, down 0.9%, while the Dow Jones is down just 0.1%.

Tech stocks led Wall Street higher in the previous session as chipmakers rebounded, with the Philadelphia Semiconductor Index jumping 5%, its strongest daily gain in a month.

Investors are now turning their attention to Alphabet and chipmaker Texas Instruments for further insight into the AI trade. Markets have become increasingly nervous in recent months over the scale of AI spending and the uncertain timeline for returns.

Separately, escalating tensions between the U.S. and Iran are pushing oil prices higher. The two countries exchanged strikes for an 11th consecutive day, while shipping through the Strait of Hormuz remains severely disrupted and concerns over Saudi supply continue to build.

Brent crude has climbed towards $95 a barrel, reviving inflation concerns, lifting Treasury yields and creating another headwind for equities.

Looking ahead, the focus will remain on earnings and developments in the Middle East, with the U.S. economic calendar remaining quiet until Friday's PMI data.

Corporate Movers

Alphabet is in focus ahead of earnings after the close. While earnings and revenue will be closely watched, investors will be paying particular attention to capital expenditure during the quarter and guidance for the rest of the year. Alphabet could guide for more than $300 billion in capital expenditure in 2027, above market expectations of $261 billion. To help fund that investment, Alphabet has issued $20 billion in debt since the end of the first quarter and announced an $84.75 billion equity raise.

If Alphabet disappoints on full-year guidance or management softens its outlook on the return timeline for AI infrastructure spending, it could weigh on semiconductor and memory chip demand, creating a broader ripple effect across the sector.

Super Micro Computer is up 17% after reporting stronger-than-expected Q4 profit, offsetting revenue that came in at the lower end of guidance.

The results are also lifting Dell Technologies and Hewlett Packard Enterprise, which are both trading higher.

AT&T is up 3% after reporting earnings of 65 cents per share, ahead of expectations for 59 cents, despite otherwise mixed quarterly results.

Dow Jones Forecast – Technical Analysis

The Dow Jones continues to trade within a rising channel dating back to mid-April.

The index recently ran into resistance at the record high of 53,350 before easing back towards 52,100. Momentum is beginning to slow, with the RSI drifting back towards neutral.

Even so, the broader uptrend remains intact.

Buyers will look for a move back towards 52,800, the midpoint of the rising channel, before retesting the 53,350 record high. A break above here would open the door to fresh all-time highs.

On the downside, a break below 51,800 would take the price out of the rising channel and expose the 50-day SMA around 51,400. Below there, attention turns to the 50,450 area and the February high.

FX Markets – Dollar Firms, GBP/USD falls

The U.S. dollar is rising towards a weekly high as Treasury yields remain elevated. The benchmark 10-year Treasury yield is hovering near a two-month high as geopolitical tensions continue to fuel inflation concerns. The dollar is also benefiting from safe-haven demand, which could continue to limit any downside.

EUR/USD is little changed ahead of Thursday's ECB rate decision. The ECB is expected to leave interest rates unchanged at 2.25% after raising rates by 25 basis points in June. However, policymakers could pave the way for another hike in September as rising oil prices threaten to complicate the inflation outlook, despite June inflation easing to 2.8%.

GBP/USD is falling towards 1.3350 after softer-than-expected UK inflation data. Headline CPI eased to 2.6% in June, below expectations of 2.7%, while services inflation slowed from 3.8% to 3.6%, suggesting underlying price pressures continue to ease. Fiscal concerns also remain in focus amid uncertainty over Prime Minister Andy Burnham's economic agenda. However, with oil prices climbing again, the June improvement in inflation could prove short-lived.

Oil Firms as Supply Risks Persist

Oil prices are climbing towards a six-week high as fears of further supply disruptions grow after the U.S. and Iran exchanged fire for an 11th consecutive night. Meanwhile, oil tankers have made U-turns in the Red Sea following threats from Iran-backed Houthi forces.

The ongoing conflict has raised concerns over energy supplies, with hopes of mediation fading as hostilities between the two sides intensify. Adding to the risk, the Houthis have threatened to target vessels carrying Saudi crude through the Bab el-Mandeb Strait and announced a naval blockade of Saudi Arabia.

The Bab el-Mandeb has become increasingly important as traffic through the Strait of Hormuz has fallen sharply. If both routes are disrupted, tankers would face longer, more expensive journeys, tightening global oil supplies and providing further support for crude prices.