Dow Jones futures gain due to rebound in technology shares
- Dow Jones futures rise as Wall Street posted gains on a rebound in technology shares.
- Meta Platforms announced plans to deploy millions of its chips in a new data center.
- US stocks rose as FOMC Minutes showed most policymakers favored holding rates steady, with few supporting a cut.
Dow Jones futures edge higher 0.06% to around 49,750 during European hours on Thursday. S&P 500 and Nasdaq 100 futures gain 0.22% and 0.34%, respectively, trading near 6,910 and 25,000 at the time of writing.
US index futures move higher following Wall Street's gains in the previous session, supported by a rebound in technology shares. On Wednesday’s regular US session, the Dow Jones rose 0.26%, the S&P 500 gained 0.56%, and the Nasdaq 100 climbed 0.78%.
Nvidia advanced 1.6% after Meta Platforms announced plans to deploy millions of its chips in a new data center. Micron Technology jumped 5.3%, while Amazon rose 1.8%. Energy and financial stocks were also among the top sector performers. Traders are now turning their attention to earnings from Walmart for further insight into consumer spending trends and the broader economic outlook.
US stocks gained ground as market sentiment improved after the January Federal Open Market Committee (FOMC) Meeting Minutes indicated nearly all policymakers backed holding rates steady, with few favored a cut, and officials signaled openness to easing if inflation cools as expected.
Markets modestly pared Fed rate cut bets but still expect two 25 basis points reductions later in the year. The CME FedWatch tool suggests that the Fed will leave interest rates unchanged in the current range of 3.50%-3.75% in the March and April policy meetings.
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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