- Dow Jones index advanced moderately with geopolitical tensions limiting gains.
- Good quarterly earnings from United Health and Morgan Stanley provide optimism.
- Technical picture remains bearish with DJIA drifting away from March highs.
The Dow Jones Industrial Average (DJIA) is going through a moderate advance in a cautious session on Tuesday morning. The high US Treasury yields and market concerns about the volatile situation in the Middle East have offset the positive impact of quarterly earnings results.
United Health and Morgan Stanley have reported better-than-expected quarterly earnings on Tuesday, offsetting the disappointing results by Bank of America (BAC) and Johnson & Johnson (JNJ).
Traders, however, remain wary of risk as Israel ponders its response to Iran’s missile attack as the international community pressures its leaders to show restraint.
In this scenario, the main Wall Street indices are mixed, with the Dow Jones 0.3% higher to 37,860, while the S&P 500 and the NASDAQ waver around opening levels at 5,062 and 15,900, respectively.
Dow Jones news
The Technology sector is leading gains 0.4% advance. That sector’s gains are followed by Health 0.3% higher. The Real Estate sector is the worst performer with a 1.08% decline, and next is the Energy sector, down 1.02%.
UnitedHealth (UNH) is outperforming with a 5.5% rally to $470.10 after its quarterly report beat expectations. Salesforce (CRM) rises 2.17% to $278.80. On the negative side, Johnson & Johnson drops 2.35% to $144.10, and Apple (AAPL) loses another 1.86% to $169.47.
Dow Jones technical outlook
The DJIA index is trimming some loose ends on Tuesday although the overall picture remains bearish. The move below 38,560 has activated a Head & Shoulders pattern that points toward a sharper decline.
Immediate support is 37,586, followed by the measured target of the H&S pattern, which meets the mid-January low and 38.6% Fibonacci retracement at 37,087. A bullish reaction might find resistance at the 38,531 previous support ahead of the 39,000 region (order block).
Dow Jones Index 4-Hour Chart
Nasdaq FAQs
The Nasdaq is a stock exchange based in the US that started out life as an electronic stock quotation machine. At first, the Nasdaq only provided quotations for over-the-counter (OTC) stocks but later it became an exchange too. By 1991, the Nasdaq had grown to account for 46% of the entire US securities’ market. In 1998, it became the first stock exchange in the US to provide online trading. The Nasdaq also produces several indices, the most comprehensive of which is the Nasdaq Composite representing all 2,500-plus stocks on the Nasdaq, and the Nasdaq 100.
The Nasdaq 100 is a large-cap index made up of 100 non-financial companies from the Nasdaq stock exchange. Although it only includes a fraction of the thousands of stocks in the Nasdaq, it accounts for over 90% of the movement. The influence of each company on the index is market-cap weighted. The Nasdaq 100 includes companies with a significant focus on technology although it also encompasses companies from other industries and from outside the US. The average annual return of the Nasdaq 100 has been 17.23% since 1986.
There are a number of ways to trade the Nasdaq 100. Most retail brokers and spread betting platforms offer bets using Contracts for Difference (CFD). For longer-term investors, Exchange-Traded Funds (ETFs) trade like shares that mimic the movement of the index without the investor needing to buy all 100 constituent companies. An example ETF is the Invesco QQQ Trust (QQQ). Nasdaq 100 futures contracts allow traders to speculate on the future direction of the index. Options provide the right, but not the obligation, to buy or sell the Nasdaq 100 at a specific price (strike price) in the future.
Many different factors drive the Nasdaq 100 but mainly it is the aggregate performance of the component companies revealed in their quarterly and annual company earnings reports. US and global macroeconomic data also contributes as it impacts on investor sentiment, which if positive drives gains. The level of interest rates, set by the Federal Reserve (Fed), also influences the Nasdaq 100 as it affects the cost of credit, on which many corporations are heavily reliant. As such the level of inflation can be a major driver too as well as other metrics which impact on the decisions of the Fed.
