Dow Jones futures rise in response to positive developments on trade negotiations
- Dow Jones futures edged higher as market sentiment improves over positive trade developments.
- Trump announced a trade agreement with Japan that imposes a 15% tariff on Japanese exports to the US.
- Traders will likely observe Wednesday’s major earnings releases from megacap techs.
Dow Jones Futures rises ahead of the US market opening on Wednesday, trading around 44,850, up by 0.32%, during European hours. Meanwhile, S&P 500 Futures are up by 0.28% to 6,360, and Nasdaq 100 Futures appreciate 0.13% to trade near 23,250.
US stock index futures gain ground as market sentiment improves following developments on trade deals. United States (US) President Donald Trump announced a trade deal with Japan that includes a 15% tariff on Japanese exports to the US. As part of the agreement, Japan will invest $550 billion in the US and open its markets to key American products.
President Trump said during a meeting with the Philippines President Bongbong Marcos on Tuesday that “I think we will get a trade deal; we're close to a trade deal.” I don't mind if the Philippines gets along with China, he added. Meanwhile, US Treasury Secretary Scott Bessent stated that American and Chinese officials are set to meet in Stockholm next week for a third round of high-level talks.
The US stock markets appreciated on Tuesday’s regular session, with the Dow Jones advancing 0.4% and the S&P 500 rising 0.06%. However, the Nasdaq Composite declined 0.39%, driven by a decline in chipmakers.
Nvidia dropped 2.4% and Broadcom declined 3.3% following reports that SoftBank and OpenAI’s ambitious AI joint venture has hit a pause. Market attention has now shifted to Wednesday’s major earnings releases from megacap tech names Tesla and Alphabet, with updates also expected from Hasbro, Chipotle, and Mattel.
Additionally, market sentiment dampened amid disappointing earnings results. Lockheed Martin declined 10.8% and Philip Morris fell 8.2% following weaker-than-expected reports, while General Motors slid 8% after warning of steeper profit impacts stemming from tariffs.
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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