Dow Jones futures rise ahead of upcoming corporate earnings reports
- Dow Jones futures rose as growing expectations of a Fed rate cut in September boosted market sentiment.
- Traders await upcoming earnings reports from Uber, McDonald’s, Disney, Airbnb, DoorDash, and others.
- Market sentiment may turn cautious as investors await President Trump’s upcoming trade deadline on Friday.
Dow Jones futures surge during early European hours, ahead of the market opening in the United States (US) on Wednesday, trading around 44,450, up by 0.51%. Meanwhile, S&P 500 futures advance by 0.47% to 6,350, and Nasdaq 100 futures appreciate 0.34% to trade above 23,200.
US stock futures climb on boosted market sentiment amid rising bets on an interest rate cut by the US Federal Reserve (Fed) in September. Markets continued to reflect over a 90% probability of a Fed rate cut in September, with roughly 60 basis points of total easing expected by year-end.
In futures trading, Arista Networks jumped over 14% after posting strong quarterly results. However, AMD fell more than 5% after missing estimates, driven by US export restrictions to China, while Snap, the social media platform, sank 14% after falling short of second-quarter revenue expectations.
Market focus now shifts to upcoming earnings reports from Uber, McDonald’s, Disney, Airbnb, and DoorDash, among others. Additionally, investors will be watching for remarks from several Federal Reserve policymakers later in the day, including Susan Collins, Lisa Cook, and Mary Daly.
Futures linked to the broad market index may struggle as stagflation fears resurfaced after the Institute for Supply Management (ISM) Services PMI declined to 50.1 in July. The reading came down from 50.8 in the previous month and fell short of the expected reading of 51.5. Meanwhile, the Services Employment Index ticked lower to 46.4 from 47.2, and the Services New Orders Index deflated to 50.3 from 51.3.
Additionally, traders may look for safe-haven assets amid renewed trade tensions, driven by a new threat from US President Donald Trump, citing to imposition of tariffs of up to 250% on pharmaceutical imports, and potential levies on semiconductors. Moreover, risk sentiment could increase ahead of Trump's latest trade deadline on Friday, when a fresh round of high tariffs will go into effect on multiple nations unless last-minute deals are reached to negotiate lower levies.
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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