Today Fundamental Analysis: Dow Jones closes at a new record high on market optimism

US stock futures edged higher on Tuesday following Monday’s strong rally, with Dow and S&P 500 futures gaining around 0.2% and Nasdaq-100 futures rising 0.3%. The Dow closed at a fresh record high on Monday, supported by strong gains in major technology stocks. Amazon surpassed a $3 trillion market capitalization for the first time, while Nvidia, Meta, Alphabet and Microsoft also advanced. Asian markets were mixed, with losses in Japan, South Korea and Hong Kong, while Australian and mainland Chinese equities moved higher.

Lower oil prices provided additional support to risk sentiment. WTI crude plunged 5% to settle at $80.40 per barrel after President Donald Trump stepped back from plans for additional attacks on Iran. However, geopolitical uncertainty remains elevated after Trump said the US was engaged in talks with Iran and described the situation as Tehran’s last chance to reach an agreement. Iran denied that negotiations were taking place, leaving investors focused on potential diplomatic developments and the reopening of the Strait of Hormuz.

Meanwhile, gold attempted a modest recovery around $4,050 after two consecutive days of losses. Safe-haven demand from US-Iran tensions is providing some support, but a recovering US dollar continues to limit gains. The dollar was boosted by stronger-than-expected US economic data, with the ISM Manufacturing PMI rising to 55.6 in July from 53.3, its highest level since May 2022.

Attention now turns to US labor-market data, starting with Tuesday’s JOLTS job openings report and culminating with Friday’s Nonfarm Payrolls. Strong employment figures could reinforce expectations that the Federal Reserve will maintain a hawkish stance, with markets currently pricing around a 65% probability of a September rate hike. Investors will also monitor corporate earnings, including Caterpillar and McDonald’s, while AMD is scheduled to report after the closing bell.

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