Dow Jones teases new record on warm Monday

VaselineSeptember 23, 2024

0 4 minutes read

Dow Jones teases new record on warm Monday

The Dow Jones hit an all-time high but remains flat overall.
Stocks are trending higher, but overall market momentum remains limited.
US S&P PMI numbers were mixed on Monday, but Fedspeak dominates.

The Dow Jones Industrial Average (DJIA) tested a new record bid on Monday, but the average US data print and cautious Fedspeak earlier in the day kept risk appetite limited. The S&P US Purchasing Managers Index (PMI) figures are printed on both sides of the mid-market forecasts, and Federal Reserve (Fed) Bank of Chicago President Austan Goolsbee warned that despite the Fed’s extra-large initial rate cut this month, other moves on the Fed reference. rate may be needed over the next year to prevent a potential deterioration in the US labor market.

September’s S&P US Manufacturing PMI fell to 47.0 for the month, falling to its lowest level since July 2023, as the US manufacturing sector sees a continued gloomy outlook for business activity. On the other hand, the S&P US Services PMI fell to 55.4 in September, down from August’s 55.7 but beating the expected print of 55.2.

Fed policymaker and Chicago Fed President Austan Goolsbee hit markets with tepid comments early Monday, noting that a much bigger rate move from the Fed may be needed. The Fed official pointed out that the Fed may need to pull much lower on policy rates to keep business lending conditions liquid enough to keep the US business landscape keeling over as the record tightening of in the US labor market is drying up.

Economic indicator

S&P Global Manufacturing PMI

The S&P Global Manufacturing Purchasing Managers Index (PMI), released monthly, is a leading indicator that assesses business activity in the US manufacturing sector. The data are derived from surveys of CEOs from private sector companies in the manufacturing sector. Survey responses reflect the change, if any, in the current month compared to the previous month and may anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the US dollar (USD). Meanwhile, a reading below 50 signals that activity in the manufacturing sector is generally declining, which is seen as bearish for the USD.

Dow Jones News

About half of the Dow Jones tested the lower side on Monday, forcing the stock board to settle in the middle on the main numbers. Intel ( INTC ) rose nearly 3% early in the day after it was reported that Apollo Global Management made a $5 billion investment in Intel, signaling that investors are increasingly confident that the computer maker chips may be able to reverse its recent comeback. Investing exploration from (AGM) also helped fend off a possible takeover bid from Intel’s immediate competitor in the silicon space, Qualcomm, which recently considered buying Intel outright.

Dow Jones Price Forecast

The Dow Jones continues to eat chart paper near the 42,000 mark despite a series of brief tests at all-time highs. The DJIA is up nearly 5.5% from its recent low below 40,000 to the upside, but short-term bullish momentum appears to be straining at the outer limits.

With the bulls running out of technical levels to act as hard targets, the Dow Jones could be poised for a mild pullback with an immediate technical level close to the 50-day exponential moving average (EMA) in increase from 40,700.

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.

VaselineSeptember 23, 2024

0 4 minutes read