Dow Jones futures trade lower amid uncertainty over future of Trump’s tariffs
- Dow Jones futures face pressure as uncertainty over Trump tariffs future weigh on risk sentiment.
- US President Trump announces that he will drag tariffs case to Supreme Court.
- Investors expect the Fed to cut interest rates this month.
Dow Jones futures extend losses in the overnight session on Wednesday. United States (US) equities are facing selling pressure as appeals of court has announced a verdict against a majority of tariffs imposed by President Donald Trump since his return to the White House.
At the time of writing, Dow Jones futures trade 37 points lower to near 45,250. The 30-stock basket declined 0.55% on Tuesday after a long weekend.
On Tuesday, US President Trump announced that he will take the tariff case to Supreme Court immediately on Wednesday for an expedited ruling on tariffs. Last Friday, a panel of judged called majority of Trump tariffs “illegal” and accused Trump for wrongfully invoking the emergency law.
Market participants worry that the uncertainty over the economic outlook will return if Washington unwind tariffs, as US firms started structing their supply chain according to international policy changes.
However, US Treasury Secretary Scott Bessent has clarified that the Washington has more ways to keep tariffs in place.
Meanwhile, the broader outlook of US stock markets remains firm as the Federal Reserve (Fed) is almost certain to reduce interest rates in the policy meeting this month. According to the CME FedWatch tool, there is an almost 92% chance that the Fed will cut interest rates in the September policy meeting.
In Wednesday’s session, investors will focus on US JOLTS Job Openings data for July, which will be published at 14:00 GMT. US employers are expected to have posted fresh 7.4 million jobs, almost in line with the prior reading of 7.44 million.
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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