Dow Jones futures rise as US-EU tensions ease, traders eye US data
- Dow Jones futures gain amid easing concerns over geopolitical and trade tensions between Washington and Europe.
- President Trump said he would pause tariffs on European nations opposing his bid to take control of Greenland.
- Traders await US Jobless Claims, GDP, PCE inflation data, and earnings from Procter & Gamble, GE Aerospace, and Intel.
Dow Jones futures rose 0.29% to around 49,400 in the European session on Thursday, while S&P 500 and Nasdaq 100 futures climbed 0.49% and 0.74% to near 6,950 and 25,650, respectively. US stock futures advanced as geopolitical and trade tensions between Washington and Europe eased.
Bloomberg reported on Wednesday that US President Donald Trump said he would step back from imposing tariffs on goods from European nations opposing his effort to take possession of Greenland. He said earlier there is “no going back” on his ambitions regarding Greenland, alongside earlier threats to impose new 10% tariffs on eight European Union (EU) countries.
President Trump also said that the United States and the North Atlantic Treaty Organization (NATO) had “formed the framework of a future deal regarding Greenland.” However, he did not outline the parameters of the so-called framework, and it remained unclear what the agreement would entail.
In the regular US session on Wednesday, the Dow Jones climbed 1.21%, the S&P 500 rose 1.16%, and the Nasdaq 100 advanced 1.18%, paring losses registered on Tuesday. Traders await US weekly Initial Jobless Claims, Gross Domestic Product Annualized, and Personal Consumption Expenditures (PCE) inflation data later in the day for fresh economic signals, alongside earnings from companies including Procter & Gamble, GE Aerospace, and Intel.
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on 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 corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for 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 follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable 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 enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
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