- Wall Street opens the week with modest gains, relieved by the decline in oil prices.
- The Dow Jones remains near the 39,000 level and the rebound from Friday's high stalls.
- The bias remains bearish, with all eyes on Wednesday's US CPI numbers.
The Dow Jones industrial index (DJIA) has opened the week with slight advances, favored by a certain appetite for risk. Oil prices have retreated from multi-month highs as tensions in the Middle East ease somewhat, providing some relief to equity investors on Monday.
The market, however, remains expectant, with traders reluctant to take excessive risks awaiting the US Consumer Price Index data on Wednesday. US inflation is expected to accelerate to 3.4% in March, up from 3.2% annually in February, although core CPI will cool to 3.7%, down from 3.8% annually in the previous month.
Wall Street's main indices are trading positive on Monday. The Nasdaq leads the classification with an advance of 0.1%, to 16,267 points, while the S&P 500, at 5,206 points, and the Dow Jones, at 38,913 points, register marginal gains.
Dow Jones News
By sector, consumer discretionary leads the gains with an increase of 0.8%, followed by real estate, which rises 0.5%. At the bottom of Monday's classification is the Health sector, which fell 0.48%, and energy, 0.32% below Friday's close.
Nike (NKE) is the best-performing Dow stock on Monday, up 1.42% to $90.11, followed by 3M (MMM), which gains 0.97% to $91.90. On the losing side, Merck (MRK) fell 1.5% to $126.02, and Intel (INTL) fell another 1.2% to $38.25.
Dow Jones Technical Outlook
The Dow Jones index is trading virtually flat, with oscillators showing a lack of clear direction. The DJIA remains immersed in a bearish correction from the all-time high of 39,986 reached in late March.
The attempted recovery from Friday's lows has stalled below previous lows, in the 39.00 area, and with a supply zone in the 39.250 area likely offering significant resistance. On the downside, the 38,540 level remains in play and could be revised if the US CPI delivers a positive surprise on Wednesday. Below, the 38,035 area would be exposed.
Dow Jones 4-hour chart
Frequently Asked Questions About the Dow Jones
What is the Dow Jones?
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, as it only tracks 30 companies, unlike broader indices such as the S& P 500.
What factors influence the Dow Jones index?
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.
What is the Dow theory?
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 both are 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.
How can I trade with the DJIA?
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.
