Dow Jones Industrial Average flattens on warm Mondays

Vaseline2 weeks ago

0 3 minutes read

Dow Jones Industrial Average flattens on warm Mondays

The Dow Jones rallied nearly 42,000 to start the new week.
Investors await key US employment data due on Friday.
Despite the quiet month, the Dow Jones is coming off a winning month.

The Dow Jones Industrial Average (DJIA) was stuck near Monday’s opening bids at the start of a new trading week. The major stock index remained near the 42,200 level as equity traders eyed data risks and rate markets grappled with the prospect of further tapering by the Federal Reserve (Fed) in November.

Market focus will slowly shift to Friday’s US non-farm payrolls report as investors look for additional data on the state of the US economy. Rate traders continue to weigh in on the Fed’s November call, with rates slightly tilted in favor of a meager 25 bps cut. However, many market participants are still hoping for a further double cut of 50 basis points when the Fed reconvenes for another call on November 7.

A looming port strike along the East and Gulf coasts is weighing on investors’ expectations for near-term economic activity, limiting investor demand and cooling inventory advances. Adding to the downward pressure on stocks, Fed officials drew a line in the sand on Fed rate cuts, noting that further deterioration in the US labor market will be needed to spur further big moves by the Fed. That proposal weighs heavily on otherwise rate-weakened market participants, as further declines in jobs data would signal a greater risk of an imminent US recession.

Dow Jones News

The Dow Jones is generally weaker on Monday, with more than two-thirds of the stock index testing in the red at the start of the new trading week. However, firm gains for major components are helping to limit broader losses in the DJIA.

Boeing ( BA ) is burdened by its own ongoing strike, which has been going on for two weeks now. The aerospace company fell 2.45% on Monday, falling below $125.50 a share. On the upside, Apple ( AAPL ) rose 1.6% to over $231 a share, despite the company announcing that it is abandoning a round of capital raising for a planned investment in OpenAI. Apple’s withdrawal from an investment in a major artificial intelligence project has raised some eyebrows, showing warning signs that OpenAI’s recent pivot to profitability may have some bumps in the road ahead.

Dow Jones Price Forecast

Despite a warm month, the Dow Jones is poised for a stellar September performance. The index of major stocks hit a new high last week at 42,636 and is up more than 1.5% for the month. The Dow Jones is on track to close for a fifth straight month in the green, up more than 13.5% from its April lows near 37,550.

Dow Jones Daily Chart

Dow Jones FAQ

The Dow Jones Industrial Average, one of the world’s oldest stock indices, is compiled from the 30 most traded US stocks. The index is weighted by price rather than capitalization. It is calculated by summing the prices of the constituent shares and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In subsequent years, it has been criticized for not being broadly representative enough, as it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.

Many different factors determine the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in the company’s quarterly earnings reports is the main one. US and global macroeconomic data also contribute as they impact investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA because it affects the cost of credit, on which many corporations depend heavily. Therefore, inflation can be a major factor as well as other indicators influencing the Fed’s decisions.

The Dow Theory is a method of identifying the primary 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 watch trends where both are moving in the same direction. Volume is a confirmation criterion. The theory uses peak and trough elements of analysis. Dow’s theory posits three phases of a trend: accumulation, when the smart money starts buying or selling; public participation, when the general public joins in; and distribution, when the smart money comes out.

There are several ways to trade the DJIA. One is the use of ETFs that allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A prime example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures 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 buy one share of a diversified portfolio of DJIA stocks, thereby providing exposure to the overall index.

Vaseline2 weeks ago

0 3 minutes read