Dow Jones futures remain steady ahead of US Retail Sales data
- Dow Jones futures move little as traders await the US Retail Sales data ahead of the looming Fed decision.
- US stocks may rise as markets expect a 25 bps Fed cut, with little chance of deeper easing.
- President Trump posted on “Social Truth” that US-China relations remain “very strong.”
Dow Jones futures are steady near 45,900 during European hours on Tuesday, ahead of the United States (US) market open. Moreover, the S&P 500 futures advance 0.20% to trade above 6,600, while Nasdaq 100 futures edge up 0.32% to trade near 24,400. Traders will likely watch the US Retail Sales data for August, due on Tuesday, which could offer fresh cues on US consumer spending.
US stock futures show mixed performance with improved market sentiment ahead of the looming Federal Reserve (Fed) policy decision due on Wednesday. Traders expect the US central bank to deliver a 25-basis-point rate cut at its September meeting, with markets pricing in a slim probability of a larger 50-basis-point cut.
On Monday’s regular session, the Dow Jones climbed 0.11%, while the S&P 500 rose 0.47% and the Nasdaq Composite advanced 0.94%, both setting new all-time highs. US markets gained after the United States and China reached a commercial agreement on Monday to place TikTok under US ownership, with final approval anticipated during a Friday call between US President Donald Trump and Chinese President Xi Jinping. Trump wrote on “Social Truth” that the “big Trade Meeting” went “VERY WELL!” and emphasized that US-China relations remain “very strong.”
Nvidia edged down 0.04% on Monday after Chinese regulators accused the company of violating anti-monopoly rules. Shopify climbed 3.2%, extending its bullish momentum, while Tesla rallied 3.6% after CEO Elon Musk revealed the purchase of 2.6 million shares valued at roughly $1 billion on Friday.
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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