Dow Jones futures gain on improved market sentiment, awaits earnings from tech giants
- Dow Jones futures receive support from the report that US-China negotiators reached a consensus ahead of the Trump-Xi Jinping meeting.
- US stocks gain support as the Fed is widely anticipated to deliver a 25-basis-point rate cut this week.
- Traders await earnings reports from major tech giants, including Apple, Amazon, Alphabet, Meta, and Microsoft.
Dow Jones futures rise 0.65% to trade near 47,700 during European hours, ahead of the opening of the United States (US) regular session on Monday. The S&P 500 futures gain 0.84% to trade around 6,880, while Nasdaq 100 futures surge 1.13% to reach 25,800 at the time of writing.
US index futures gain ground on improved market sentiment, driven by reports that US and Chinese negotiators have reached a consensus on major disputes and paved the way for Presidents Donald Trump and Xi Jinping to meet on Thursday to finalize a trade deal.
US Treasury Secretary Scott Bessent told CBS News that President Trump’s threat to impose 100% tariffs on Chinese goods “is effectively off the table.” Bessent added that China has agreed to make “substantial” soybean purchases and to postpone its rare-earth export controls “for a year while they re-examine it.”
US stock markets also draw support from the increased likelihood of a rate cut by the US Federal Reserve (Fed) this week, following softer recent US inflation data for September. The CME FedWatch Tool indicates that markets are now pricing in nearly a 97% chance of a Fed rate cut in October and a 96% possibility of another reduction in December.
In Friday’s regular session, Wall Street closed higher, with the Dow Jones and Nasdaq 100 up over 1%, the S&P 500 gaining 0.79%. Investors now await earnings reports from major tech giants, including Apple, Amazon, Alphabet, Meta, and Microsoft.
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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