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Stocks Today: Dow Jones loses ground, tech recovery lifts Nasdaq futures

  • Nasdaq futures post impressive gains as tech stocks rally.
  • PMI data and weekly jobless claims will be published on the US economic agenda.
  • Nvidia Corp. (NVDA) shares rise more than 10% in pre-market trading.

Major US stock indexes remain on track to open in positive territory following Wednesday's indecision. The rally in tech stocks in pre-market trading points to a big jump in the tech-heavy Nasdaq Composite, while gains in the Dow Jones remain limited.

S&P 500 futures rose 1.25%, Dow Jones futures rose 0.37% and Nasdaq futures rose 2.03%.

The SP500 (SPX), Dow Jones (DJIA) and Nasdaq (IXIC) indices closed Wednesday up 0.13%, up 0.13% and down 0.32%, respectively.

What you need to know before the stock markets open

  • The technology sector was the worst-performing major S&P sector and the only one to finish in the red on Wednesday, with a loss of more than 0.76% on the day. The Energy sector was in the spot, which rose almost 1.9%.
  • EQT Corp (EQT) staged a late breakout and became Wednesday's most bullish stock, gaining 10.58% and hitting the closing bell at $37.30. On the other hand, Palo Alto Networks Inc. (PAN) shares lost more than 28% and closed just below $262.00.
  • Nvidia Corp. (NVDA) shares are up nearly 14% in pre-market trading after the chipmaker reported earnings per share surpassed $5.16 versus $4.64 expected, and Revenue increased to $22.1 billion compared to the expected $20.62 billion. The company also said it expects current quarter earnings of $24 billion, up 2%.
  • Nvidia Stock Earnings: NVDA's Q4 Results Beat Consensus.
  • Mizuho has raised its price target on Nvidia shares to $850 from $825, HSBC has raised its target to $880 from $835 and Citigroup has revised its expectation to $820 from $575.
  • S&P Global will release preliminary US manufacturing and services PMI reports for February on Thursday. The US economic agenda will also include weekly data on initial jobless claims.
  • In the Minutes of the January monetary policy meeting, the Federal Reserve (Fed) indicated that most policymakers noted the risks associated with easing monetary policy too quickly. Additionally, the publication showed that officials highlighted uncertainty around how long the restrictive policy would be necessary.
  • Retail giant Walmart Inc. (WMT) reported adjusted earnings per share of $1.8 ahead of Tuesday's trading open. The company said it expects consolidated net sales to increase between 3% and 4% and announced that it will buy smart TV maker Vizio (VZIO) for about $2.3 billion.
  • Home Depot Inc. (HD) said fourth-quarter net income was $2.8 billion, and adjusted earnings per share were $2.82. The Company, however, said it projects fiscal 2024 sales below estimates, citing slowing demand for discretionary items such as flooring, furniture and kitchen, per Reuters.

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

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