Dow Jones Futures attempt to recover losses as Trump delays tariff implementation
- Dow Jones Futures holds ground as Trump signed an executive order delaying new tariffs execution from July to August 1.
- US President Donald Trump announced new tariffs of up to 40% on 14 countries.
- The US Dollar weakened amid improved risk appetite following the delayed implementation of Trump’s tariffs.
Dow Jones Futures move sideways ahead of the opening on Tuesday, trading around 44,680, up by 0.01%. Meanwhile, S&P 500 Futures were up 0.08% at around 6,280, recovering some of the previous session’s losses. Nasdaq 100 Futures led the gains, rising 0.28% to trade near 22,950 during the European hours.
US stock index futures stabilize after US President Donald Trump delayed the implementation of new tariffs from July to August 1, giving negotiators more time to reach agreements. He added, "I would say firm, but not 100% firm. If they call up and they say we'd like to do something a different way, we're going to be open to that." However, US stock futures are poised to face challenges as President Trump’s announcement of updated tariff rates on 14 countries that have yet to secure trade deals with Washington.
Trump renewed his threat of a 25% tax on imports from Japan and South Korea and shared a batch of other letters to world leaders warning of levies from 1 August. Trump also imposed 25% rates on Malaysia, Kazakhstan and Tunisia, while South Africa would see a 30% tariff and Laos and Myanmar would face a 40% levy. Other nations hit with levies included Indonesia with a 32% rate, Bangladesh with 35%, and Thailand and Cambodia with duties of 36%.
The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is retracing its recent gains from the previous session and trading around 97.20 at the time of writing. The Greenback faces challenges as market caution eases on delaying of implementation of Trump tariffs.
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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