- Dow Jones index is practically flat after a positive opening, following hawkish comments from Fed speakers.
- Strong US employment and manufacturing data has endorsed the Fed’s “higher for longer” outlook.
- Broader Dow Jones trend remains negative, on corrective reversal from March highs.
The Dow Jones Industrial Average (DJIA) is practically flat on Thursday’s early afternoon session. Wall Street opened with moderate gains as a string of strong corporate earnings boosted risk appetite before some hawkish comments from Federal Reserve’s (Fed) Williams and Bostic ruined investors’ sentiment.
New York Federal Reserve (Fed) President John Williams has echoed the words from Chair Jerome Powell by stating that there is no rush to cut rates. Somewhat later Atlanta Fed CEO, Raphael Bostic warned that the path to the 2% inflation will be slow and that the bank will not be able to cut rates before the year-ned.
Before that, US Jobless Claims and manufacturing activity figures endorsed the view of strong economic momentum and a tight labour market. On the negative side, Existing Home Sales declined in March, although the median sales price rose by 4.8% from the previous month last year. This adds to evidence of the inflationary CPI trends.
All the main Wall Street indices have dipped into negative territory. The NASDAQ drops 0.4% to 15,622, the S&P 500 loses 0.24% to 5,009 and The The Dow Jonesedges 0.1% down to 37,688.
Dow Jones news
The Technologies sector is the worst performer on Thursday, with a 0.73% decline. This sector is followed by the Consumer Discretionary, 0.58% lower.
Communication Services is leading gains, with a 0.65% advance, followed by Financials, up 0.4%.
United Health (UNH) rose 3.1% to $493.51 and is the best performer for the second day in a row, fuelled by the strong quarterly earnings results. Next is American Express (AXP) with a 0.76% gain to $219.32. Salesforce is leading losses with a 1.93% decline to $271.01, and Intel (INTC), also 1.93% down to $35.01.
Dow Jones technical outlook
The DJIA is consolidating near recent lows with the broader bearish trend intact. 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 4-Hour Chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
