Dow Jones futures lose due to market caution ahead of earnings report
- Dow Jones futures depreciate as traders adopt caution ahead of profit results from Netflix, Coca-Cola, and General Motors.
- Wall Street advanced on Monday after reports showed Apple’s iPhone 17 sales surpassed iPhone 16 sales in US and China.
- US stock markets gained support after Trump said he expects to reach a “fair deal” with China.
Dow Jones futures fall 0.18% to trade near 46,800 during European hours, ahead of the opening of the United States (US) regular session on Tuesday. The S&P 500 futures decline 0.14% to trade around 6,760, while Nasdaq 100 futures lose 0.16% to trade near 25,250 at the time of writing.
US index futures edge lower as traders adopt caution ahead of key earnings from Netflix, Coca-Cola, and General Motors. Later this week, focus will shift to results from Tesla, Intel, and Procter & Gamble.
On Monday’s regular session, the Dow Jones gained 1.12%, the S&P 500 rose 1.07%, and the Nasdaq 100 advanced 1.37%, driven by a 3.9% surge in Apple to a record high after reports showed iPhone 17 sales outpaced the iPhone 16 in both the US and China. Bank stocks also rallied as credit market concerns eased.
US stock markets also gained support from easing tensions between the United States (US) and China, the world’s two largest economies. US President Donald Trump also said he expects to reach a “fair deal” with China’s President Xi Jinping during their upcoming meeting in South Korea, signaling a possible easing of trade tensions. Disagreements over tariffs, technology, and market access remain unresolved ahead of their scheduled meeting in South Korea next week.
However, market sentiment may adopt caution due to the ongoing US government shutdown, which has entered its third week, with no clear end in sight amid a partisan fight in the Senate over federal funding priorities. The shutdown is now the third-longest funding lapse in modern history.
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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