Dow Jones rises after retail sales data beat

VaselineAugust 15, 2024

0 3 minutes read

Dow Jones rises after retail sales data beat

The Dow Jones climbed 475 points on Thursday after upbeat US data print.
US retail sales rose to an 18-month high in July.
Upbeat US data allays recession fears but tempers rate cut bets.

The Dow Jones Industrial Average (DJIA) gained 475 points on Thursday, climbing around 1.25% on the day, as stocks tipped on the bullish side after US retail sales rose well above forecasts. Markets are shrugging off recent fears of a US recession, bolstering risk appetite and sending indexes broadly higher.

However, not everything is rosy in the financial markets after the retail sales. According to CME’s FedWatch tool, rate markets are now pricing in just 25% odds of a double 50bps cut by the Federal Reserve (Fed) in September, down significantly from last week’s peak bets of 70 % odds. Rate traders still fully price in a September rate cut as a done deal, with a 75% odds of at least 25 basis points from the September 18 peak.

Dow Jones News

The Dow Jones is mostly higher on Thursday, with all but four of the index’s listed stocks testing in the green for the day. Only four stocks on the board are in the red, with losses led by Verizon Communications Inc. (VZ), which fell -1.87% to $40.13 per share.

The DJIA is being pulled higher by firm gains from key listed companies, including Cisco Systems Inc. (CSCO) and Walmart Inc. (WMT). Cisco Systems is rolling in a second day of earnings after a solid earnings decline this week, rising 7.1% Thursday to $48.67 a share. Walmart reported a decline in its earnings on Thursday, climbing 6.5% to $73.14 a share, after broadly beating growth forecasts.

Read more:

Walmart earnings and guidance impress, helping drive Dow Jones higher
Cisco earnings surprise Wall Street with fiscal fourth quarter earnings

Dow Jones Price Forecast

Thursday’s gain sees the Dow close in the green for a third straight day, climbing further above the 40,000.00 handle after a recent plunge into short-term bias below 38,500.00. Price action is trading north of the 50-day exponential moving average (EMA) as bulls return to the fold in force and bidding continues to lead prices back to all-time highs above 41,250.00 set in July.

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 for 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.

VaselineAugust 15, 2024

0 3 minutes read