Dow Jones Industrial Average hits new record high as earnings drive stocks higher
- The Dow Jones found a new intraday record high on Tuesday.
- ‘Old economy’ stocks rose sharply after quarterly earnings broadly beat the street.
- Despite an earnings glut, fresh concerns struck the tech sector as US-China trade sabre-rattling continues.
The Dow Jones Industrial Average (DJIA) surged into a record high on Tuesday, testing above 47,000 and posting a new all-time intraday high of 47,126. ‘Old economy’ stocks from companies that produce physical goods rather than information or technology services and hardware rallied hard after the latest batch of quarterly earnings swept past market expectations. On the tech side, internet giants waffled on Tuesday after US President Donald Trump suggested his new trade meeting with Chinese President Xi Jinping might not happen.
Coca Cola (KO) and 3M (MMM) surged 3% and 6%, respectively, after posting above-expectations earnings for the third quarter. Zions Bancorp (ZION) also rose 2% after reporting Q3 profits that beat the same period a year ago. Analysts expected a poorer performance from the regional bank after it disclosed a batch of bad loans weighing on its books. General Motors (GM) soared 15% after the automaker announced to shareholders it now expects to offset more of the fallout from the Trump administration’s automobile tariffs than previously expected.
The tech sector is awaiting further earnings info from ‘Magnificent Seven’ companies before dedicating to another leg higher in the ongoing AI-fueled tech rally. The tech sector remains heavily exposed to supply shocks after the Chinese government imposed strict export controls on rare earth minerals that are critical to tech hardware production and upkeep. President Trump lashed out with a threat to impose an additional 155% tariff on China beginning on November 1 if the Chinese government doesn’t rethink its trade strategy. Trump waved off an upcoming discussion with China’s Jinping, but pivoted to establish a new time and place for fresh trade talks. Now, Trump appears to be second-guessing his own trade talk plans, suggesting that the newly announced trade talks may not happen at all.
Dow Jones daily chart
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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