Dow Jones futures move little as traders await Tesla’s results
- Dow Jones futures stay silent as traders adopt caution ahead of Tesla’s corporate release on Wednesday.
- Netflix fell more than 6.5%, while Mattel dropped over 5.5% in extended trading hours.
- Coca-Cola and 3M share prices rose 4.1% and 7.7%, respectively, on Tuesday’s regular hours.
Dow Jones futures remain steady near 47,100 during European hours, ahead of the opening of the United States (US) regular session on Wednesday. The S&P 500 futures are flat around 6,770, while Nasdaq 100 futures lose 0.15% to trade near 25,250 at the time of writing.
In pre-market trading, Netflix fell more than 6.5% after missing Q3 earnings expectations, while Mattel dropped over 5.5% on disappointing results. In contrast, Intuitive Surgical surged more than 15% on the back of strong quarterly performance.
US index futures show mixed performance as traders now await Tesla’s earnings on Wednesday for further signals on the sector and look ahead to Friday’s US inflation data amid a data blackout from the ongoing US government shutdown.
The prolonged US government shutdown delays the key US economic data releases, including Nonfarm Payrolls (NFP), adding uncertainty for financial markets and the Federal Reserve (Fed). Markets will keep an eye on Trump's upcoming meeting with Xi on the sidelines of next week's economic summit in South Korea.
On Tuesday’s regular session, the Dow Jones rose 0.47% to a fresh record high, supported by upbeat earnings from major components. Meanwhile, the S&P 500 finished flat and the Nasdaq 100 dipped 0.16% as momentum in tech stocks faded.
Coca-Cola shares rose 4.1% after strong consumer demand fueled better-than-expected results, while 3M jumped 7.7% following an upgrade to its full-year outlook, supported by a focus on higher-margin products and effective cost management.
Market sentiment may improve as a Reuters poll suggested that 115 out of 117 economists have predicted that the Fed will reduce interest rates by 25 basis points (bps) to 3.75%-4.00% in the monetary policy announcement on October 29. For the year, 83 of 117 economists expect the US Federal Reserve to cut interest rates twice, while 32 anticipate one cut.
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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