- The Dow Jones index rose modestly, with geopolitical tensions limiting gains.
- The good quarterly earnings of United Health and Morgan Stanley invite optimism.
- The technical outlook remains bearish and the DJIA is moving away from March highs.
He Dow Jones Industrials Index (DJIA) registers a moderate advance in a cautious session on Tuesday morning. High US Treasury yields and market concerns over the volatile situation in the Middle East have offset the positive impact of the quarterly earnings results.
United Health and Morgan Stanley reported better-than-expected quarterly earnings on Tuesday, offsetting disappointing results from Bank of America (BAC) and Johnson & Johnson (JNJ).
Traders, however, remain wary of the risk as Israel mulls its response to Iran's missile attack and the international community pressures its leaders to show restraint.
In this scenario, the main Wall Street indices are trading mixed, with the Dow Jones rising 0.3% to 37,860, while the S&P 500 and the Nasdaq waver around the opening levels of 5,062 and 15,900, respectively.
Dow Jones News
The technology sector leads the gains with an advance of 0.4%. The gains in this sector are followed by Health, which rises 0.3%. The real estate sector is the one that performs the worst, with a decrease of 1.08%, and is followed by the energy sector, with a drop of 1.02%.
UnitedHealth (UNH) outperforms with a 5.5% rally to $470.10 after its quarterly report beat expectations. Salesforce (CRM) rises 2.17% to $278.80. On the downside, Johnson & Johnson falls 2.35% to $144.10, and Apple (AAPL) loses another 1.86% to $169.47.
Dow Jones Technical Outlook
The DJIA index trims some loose ends on Tuesday, although the overall picture remains bearish. The move below 38,560 has triggered a head and shoulders pattern pointing towards a steeper decline.
Immediate support is at 37.586, followed by the measured target of the head and shoulder pattern, which lies at the mid-January low and the 38.6% Fibonacci retracement at 37.087. A bullish reaction could find resistance at the previous support of 38,531 before the 39,000 region (order block).
Dow Jones 4-hour chart
Nasdaq FAQ
What is Nasdaq?
Nasdaq is an American stock exchange that began as an electronic stock ticker. At first, the Nasdaq only offered over-the-counter (OTC) stock listings, but it later became an exchange as well. By 1991, the Nasdaq had grown to represent 46% of the entire US stock market. In 1998, it became the first US exchange to offer online trading. The Nasdaq also produces several indices, the most comprehensive of which are the Nasdaq Composite, which represents the more than 2,500 Nasdaq securities, and the Nasdaq 100.
What is the Nasdaq 100?
The Nasdaq 100 is a large-cap index composed of 100 non-financial companies on the Nasdaq Stock Exchange. Although it only includes a fraction of the thousands of stocks on the Nasdaq, it explains more than 90% of the movement. The influence of each company in the index is weighted based on market capitalization. The Nasdaq 100 includes companies highly focused on technology, although it also includes companies from other sectors and from outside the United States. The Nasdaq 100's average annual return has been 17.23% since 1986.
How can I trade the Nasdaq 100?
There are several ways to trade the Nasdaq 100. Most retail brokers and spread betting platforms offer Contracts for Difference (CFD) betting. For long-term investors, exchange-traded funds (ETFs) operate like stocks that mimic the movement of the index without the investor having to buy all 100 companies that comprise it. An example of an ETF is the Invesco QQQ Trust (QQQ). Nasdaq 100 futures contracts allow you to speculate on the future performance 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.
What factors drive the Nasdaq 100?
There are many factors that drive the Nasdaq 100, but primarily it is the aggregate performance of its component companies, revealed in their quarterly and annual earnings reports. US and global macroeconomic data also contribute, influencing investor sentiment, which if positive, drives earnings. 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 companies largely depend. Therefore, the level of inflation can also be an important factor, as well as other parameters that influence the Federal Reserve's decisions.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
