- The Dow Jones seeks gains while other indices decline.
- A quiet Wednesday with little data leaves investors with their eyes set on the future.
- The Fed's outlook remains the focus of markets.
The Dow Jones Industrial Average (DJIA) recovered from an early decline during the American session, rising to an intraday high near 39,000.00 as the major equity index breaks away from the crowd. The other US indices fell during the mid-week session, with an uninspiring economic calendar.
The Fed's speech continues to upset investors, while market participants continue to expect the pace of rate cuts by the Federal Reserve (Fed) to accelerate. Several central bank officials have delivered dovish messages this week, warning that rate cuts are contingent on continued gains in inflation and the easing of the tight U.S. labor market.
Inflation continues to weigh on the Fed's rate cut prospects, with cut hopes further clouded by a still-tense labor market that continues to add jobs at a healthy pace and an unemployment rate well below the level. structural. The Fed's speech has increasingly dominated market flows as central planners grapple with financial markets that have been overstating hopes for rate cuts.
With the current cut, CME's FedWatch tool shows rates markets are pricing in a first quarter-point cut in September, and rates traders see a 71% chance of two rate cuts by the end of 2024.
Dow Jones News
About a third of the 30 stocks that make up the Dow Jones fell on Wednesday. Intel Corp. (INTC) fell about 3% on the day after the technology company revised its forecasts after the US Department of Commerce revoked an export license for Chinese company Huawei. Intel now expects first-quarter earnings to fall below $13 billion.
Cisco Systems Inc. (CSCO) rose 1.6% on the day, gaining three-quarters of a point to trade at $48.03 per share. Cisco was closely followed by Amgen Inc. (AMGN), which gained 1.22% and traded near $304.00 per share, as the company nears commercialization of its latest cancer drug.
Dow Jones Technical Outlook
The Dow Jones index approaches the 39,000 level on Wednesday as stocks search for bullish foothold amid thin market volumes. The Dow Jones is up about a third on the day, and bidders are looking to build a bottom after breaking short-term technical resistance near 38,970.00.
The Dow Jones is headed for its fifth consecutive rally, rising from the last swing low at 37,600.00. The index is trading well above the 200-day exponential moving average (EMA) at 36,863.68 points. Despite the gains, the Dow Jones continues to trade below the recent all-time highs of the major equity indices, just below 40,000.00 points.
DJIA five minute chart
DJIA daily 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, since it only follows 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 Federal Reserve's decisions.
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 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.
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.
