- The Dow Jones takes a pause as bids remain just above 44,000.
- The post-election rally stops, but with little retreat on the horizon.
- US CPI inflation data will be released on Wednesday to boost momentum.
The Dow Jones Industrial Average lost a scant 200 points on Tuesday, marking territory just north of the 44,000 zone as stocks take a brief pause from the post-election rally that took the Dow to new all-time highs. The major stock index soared above 44,000 last week after former President Donald Trump appeared to surprisingly win the election, sending investors into a buying frenzy of whatever they could find.
Now that the Dow Jones is up more than 18% in 2024 alone, the post-election glut is taking a pause as investors weigh whether stocks are entering oversold territory. The DJIA is on track to post its strongest month since November last year, when the stock index added nearly 9% over a four-week period. The Dow Jones is up more than 5.5% this November, and one-sided stock traders are taking a pause as US Consumer Price Index (CPI) inflation numbers loom.
US CPI inflation figures for the month of October are scheduled to be released on Wednesday, with markets expecting a rebound in annualized consumer price growth. Headline CPI inflation is expected to rise to 2.6% year-on-year compared to September’s figure of 2.4%. Core CPI inflation is expected to remain stable at 3.3% year-on-year. The monthly figure for both inflation categories is expected to remain stable month on month.
Dow Jones News
Tuesday’s pause in the broader market rally has led about two-thirds of the Dow to test in the red on the day. Losses were led by 3M (MMM) and Boeing (BA), each falling just under 3% from the day’s opening prices. 3M fell below $130 per share, while Boeing fell below $145 per share.
On the positive side, Honeywell International (HON) rose almost 3% and surpassed $231.50 per share. This week, it was revealed that activist investment firm Elliott Management has taken a significant stake in Honeywell, bolstering market confidence in the tech company’s prospects.
Elliott Management has sent a letter to Honeywell’s board of directors proposing a major restructuring of the company. They suggest that Honeywell should be split into two independent entities. Elliott believes this separation could increase Honeywell’s share price by 51% to 75% over the next two years.
Dow Jones Price Forecast
Tuesday’s slight losses have taken the action off the Dow Jones’ mostly one-sided November chart, although the main stock index still remains in bullish territory north of 44,000. A bullish extension occurred in early November after price action bounced cleanly from the 50-day EMA as bids and the key moving average mixed near the 42,000 area.
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
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.
