Dow Jones Forecast: DJIA rises after the Fed meeting, trade war worries linger

US futures

Dow future 0.29% at 42092

S&P futures 0.28% at 5690

Nasdaq futures 0.25% at 19808

In Europe

FTSE -0.15% at 8700

Dax  -1.26% at 22995

• Federal Reserve left rates unchanged
• Fed maintains two rate cut outlook
• Trump trade tariff worries linger
• Oil falls amid a stronger USD

Choppy trade continues

US stocks have opened higher as the market continues to digest the Federal Reserve interest rate decision, along with trade war worries and a solid housing report.

The Federal Reserve left interest rates unchanged in yesterday's meeting, highlighting concerns over increased uncertainty due to Trump's trade tariffs. The Fed lifted its inflation outlook forecast to 2.7% and cut its growth forecast, highlighting the uncertainties.

Even so, investors' fears were soothed by Powell's comments that any uptick in inflation from trade tariffs would be transitory and that the US was still a long way from a recession. The Fed maintained its two-rate cut outlook.

US stocks closed sharply higher yesterday, and futures extended that recovery until the market mood soured as investors once again fretted over U.S. trade tariff policies. Still, those losses proved to be short-lived as US existing home sales topped estimates, boosting the mood again. US jobless claims were in line with estimates.

The take away here is that volatility remains high with plenty of news flows to drive direction. Choppy trade is likely to continue.

Corporate news

Tesla is falling 2.7% after re-calling 46,096 cyber truck vehicles to fix an exterior trim panel that could detach while driving. This is the latest of a series of callbacks to the pickup truck since 2024.

PDD, the Temu parent company, is falling 6% after posting weaker-than-expected earnings in Q4. PDD posted EPS of 18.53 yuan on revenue of $15.2 billion , below forecasts of 19.85 yuan.

Dow Jones forecast – technical analysis.

The Dow Jones recovery from the 40,660 March low ran into resistance at the 200 SMA at 42,200. Buyers will need to rise above this key dynamic resistance to extend gains towards 43000 round number and 43,350 the late December high. Failure to rise above the 200MA keeps bears in control. Immediate support is seen at 41,735. A break below here opens the door to 40, 660 and lower lows.

FX markets – USD rises, UGBP/USD falls

The USD is rising in the aftermath of the Fed interest rate decision. While the Fed left rates on hold Jerome Powell said policymakers were in no rush to make a move, preferring a wait and see mode to assess the impact of Trump’s policies.

EUR/USD is flying amid a stronger U.S. dollar and a risk-off market mood. Concerns over a Trump-led trade war slowing the eurozone economy drag on demand. There is no eurozone economic data. Instead, the focus is on a speech by ECB president Christine Lagarde, who warned that trade tariffs could push inflation up by 0.5%.

GBP/USD is falling against the stronger U.S. dollar after the Bank of England left interest rates on hold at 4.5%. The central bank is adopting a cautious approach with gradual easing amid a stagflation picture and rising uncertainties surrounding Trump's trade war.

Oil unchanged after inventory data & the Fed

Oil prices held steady on Friday as investors considered higher-than-expected fuel inventory drawdowns in the US, renewed tensions in the Middle East, and a stronger USD.

According to data, distant inventories fell by 2.8 million barrels, well below the 300,000-barrel decline expected. Meanwhile, crude oil inventories rose 1.78 million barrels, exceeding expectations of an increase of 512,000.

Meanwhile, gains are capped by a stronger U.S. dollar, which extends its recovery from a five-month low following yesterday's Fed rate decision. A stronger USD makes oil more expensive for buyers with other currencies.