The Dow Jones, Nasdaq 100 and S&P 500 remain timid in the face of Trump’s tariff tension

  • The Dow Jones gains 0.22% today.
  • The Nasdaq 100 fell 0.30% on the day, remaining within the operating range of the previous session.
  • The S&P 500 rises marginally by 0.03% daily, following weekly unemployment benefit requests.

The Dow Jones set a low for the day at 44,097 where it attracted buyers who pushed the index to six-week highs not seen since December 11, 2024 at 44,276.

The Dow Jones Industrial Average began the day at 44,110, while the Nasdaq 100 technology index began trading at 21,808. The S&P 500 opened at 6,075, consolidating near the all-time high recorded on December 6 at 6,098.

The Dow Jones trades higher and reaches six-week highs

The Dow Jones index is trading at the time of writing at 44.228, up 0.22%, reaching highs not seen since December 11, 2024 at 44.276.

Caterpillar (CAT) shares show a gain of 1.30% on the day, visiting December 9, 2024 highs of $403.67. Along the same lines, Johnson & Johnson (JNJ) shares rose 1.07% today, reaching two-day highs of $147.15.

Investors will be attentive to the publication of the US S&P Global manufacturing and services PMIs to be published tomorrow.

Electronic Arts Stock Drags Nasdaq 100 Into Negative Territory

The Nasdaq 100 technology index fell 0.30% on Thursday, trading at 21,775 at the time of writing, remaining within the operating range of the previous session.

The leading digital entertainment company Electronic Arts (EA) plummeted 17.12% today, reaching lows not seen since March 22, 2023 at $116.30 after cutting its video game sales projections. The consensus expects the company to release its earnings report on February 4.

Continuing with the bearish perspective, ARM Holdings shares fall 7.29% daily, currently trading above 166.96, within the operating range of Wednesday’s session.

S&P 500 trades flat after US weekly jobless claims

The S&P 500 index registers a marginal gain of 0.03% on the day, currently trading at 6,086, marking five consecutive sessions on the rise.

GE Aerospace (GE) stock rallied 7.14% today, setting a new all-time high at $207.65 after reporting revenue of $9.88 billion, higher than the consensus expected $9.57 billion. Likewise, it obtained earnings per share of $1.32, above the projected $1.05.

On the other hand, weekly requests for unemployment benefits stood at 223,000 in the week that ended on January 17, exceeding the estimated 220,000 and the 217,000 of the previous week.

Technical analysis of the Dow Jones

The Dow Jones established short-term support given by the January 16 low at 43,048. To the upside, we see the key resistance zone at 45,065, the historical maximum reached on December 4, 2024.

Dow Jones 4-hour chart

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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