Dow Jones Industrial Average coils as equities snub Fed Meeting Minutes
- The Dow Jones is down slightly on Wednesday after a failed attempt to reach 42,450.
- Equity markets are awaiting after-the-bell earnings from AI rally darling Nvidia (NVDA).
- The Fed’s latest Meeting Minutes show the Fed remains firmly entrenched in wait-and-see mode.
The Dow Jones Industrial Average (DJIA) is slightly lower on Wednesday, easing to intraday lows near 42,150 as equity traders await key earnings reports from tech heavyweight Nvidia (NVDA). The Federal Reserve’s (Fed) latest Meeting Minutes showed that the major central bank is still apprehensive about adjusting policy rates in the face of looming impacts from the Trump administration’s tariff policies. However, investors are still banking on a fresh rate-cutting cycle to kick off in September, although odds are drying up.
The Fed's latest Meeting Minutes from the Federal Open Market Committee's (FOMC) May 6-7 rate meeting revealed a deep-rooted wait-and-see approach. Policymakers noted the US Dollar's (USD) safe-haven status has weakened and warned that a "durable shift" could impact the US economy. Most FOMC members agreed that inflation risks may be more "persistent than expected." Fed staff cited tariff impacts as a key driver behind the FOMC's lowering outlook on the US economy, linking deteriorating conditions and an unclear inflation-growth outlook to the Trump administration's tariff policies.
AI tech rally monolith Nvidia (NVDA) is set to release its latest earnings report after the bell on Wednesday. Equity markets are expecting an Earnings Per Share (EPS) of 0.75, with revenue for the most recent quarter to top 43.25B, a 13.3% increase from the previous quarter. EPS has consistently beaten forecasts. However, this is the first time over the past year that investors expect Nvidia's EPS to decline, with markets anticipating a return to 0.75 compared to last quarter’s 0.85.
Dow Jones price forecast
Dow Jones price action remains stuck in a near-term rut; the major equity index is trapped just south of the 42,500 region, though daily candles continue to find a foothold above the 200-day Exponential Moving Average (EMA) near 41,655. Momentum still lies in favor of bullish pressure, though it’s still a long climb back to record highs above 45,000 set late last year.
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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