Dow Jones Industrial Average finds support on Tuesday

  • The Dow Jones was steady on Tuesday, holding near 42,000.
  • Geopolitical market tensions eased after the US discouraged an Israeli escalation against Iran.
  • Investors are now grappling with lower expectations for rate cuts after last week’s jobs data.

The Dow Jones Industrial Average (DJIA) held steady on Tuesday, holding near the 42,000 level as markets digest factors pulling investor expectations in multiple directions. Investor concerns about the Israel-Iran escalation eased early on Tuesday after the US verbally intervened in the still-hot Middle East conflict. Risk appetite regained ground on the news, but investor sentiment remains tepid as traders grapple with a bleaker outlook on Federal Reserve (Fed) rate cuts for the rest of the year.

US President Joe Biden intervened directly to warn Israel that a direct retaliatory strike against Iran would be reckless, helping to relieve some of the built-up pressure and preventing the Middle East conflict from spreading to other neighboring countries. . Iran launched a retaliatory attack against Israel this weekend in response to Israel’s invasion of Lebanon.

Rate markets continue to overwhelmingly bet on a single quarter-point rate cut by the Fed in November. According to the CME’s FedWatch tool, rates markets see a nearly 90% chance that the Fed will follow September’s 50bp rate cut with a more modest 25bp on November 7. Hopes for a second double cut were dashed after US jobs data far exceeded expectations last week. Fed officials have widely signaled that a weakening of the U.S. labor market would be required to push the Federal Reserve into more significant rate cuts.

Dow Jones News

A little more than half of the stocks listed on the Dow Jones are in the green on Tuesday, but overall gains remain slim as the higher ground is spread evenly across several sectors. Caterpillar (CAT) fell 2.5% to $388 per share after China did not announce more construction support subsidies, and Travelers Companies rose 1.75% to $230 per share in a slight recovery from the slump in the -2.4% on Monday.

Dow Jones Price Forecast

Despite a bearish start to the trading week, the Dow Jones continues to trade above the 50-day exponential moving average (EMA) near 41,220. The major stock index has bounced off the 50-day EMA several times in recent months as an uptrend remains strong.

The MACD has been flashing bearish warnings while the Dow Jones trades deep in bullish territory, but downside momentum remains limited as the indices continue to tilt toward the higher end.

Dow Jones Daily Chart

The Dow Jones FAQs


The Dow Jones Industrial Average, one of the world’s oldest stock indices, is made up of the 30 most traded securities in the United States. The index is weighted by price rather than capitalization. It is calculated by adding the prices of the securities that comprise it and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, also founder of the Wall Street Journal. In recent years it has been criticized for not being sufficiently representative, since it only follows 30 companies, unlike broader indices such as the S& P 500.


There are many factors that drive the Dow Jones Industrial Average (DJIA). The main one is the aggregate performance of its component companies, revealed in quarterly corporate earnings reports. US and global macroeconomic data also contribute, influencing 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 companies largely depend. Therefore, inflation can be a determining factor, as well as other parameters that influence the decisions of the Federal Reserve.


The Dow Theory is a method for identifying the main 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 they are both moving in the same direction. Volume is a confirmation criterion. The theory uses elements of maximum and minimum analysis. The Dow theory proposes three phases of the trend: accumulation, when the smart money begins to buy or sell; public participation, when the general public joins the trend; and distribution, when the smart money abandons the trend.


There are several ways to trade the DJIA. One of them is to use ETFs that allow investors to trade the DJIA as a single security, instead of having to buy shares of the 30 companies that comprise it. A prominent example is the SPDR Dow Jones Industrial Average ETF (DIA). Futures contracts on the DJIA allow 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 allow investors to purchase a portion of a diversified portfolio of DJIA securities, providing exposure to the global index.

Source: Fx Street

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