Dow Jones futures slid as potential US government shutdown looms
|- Dow Jones futures fall as traders adopt caution on government shutdown risks.
- The possible government shutdown may delay the upcoming US jobs report this week.
- Wall Street opened on solid ground Monday, boosted by a rebound in artificial intelligence stocks.
Dow Jones futures decline 0.18% to trade near 46,500 during European hours on Tuesday, ahead of the regular session opening in the United States (US). Meanwhile, the S&P 500 futures slid 0.19% to stay near 6,700, while Nasdaq 100 futures fall 0.21% to move below 24,800.
US index futures struggle due to market caution as this week’s US jobs report may be delayed, with the government nearing a funding freeze and possible shutdown. Congressional leaders failed to reach a deal during Monday afternoon’s meeting. Traders await the September Nonfarm Payrolls report for insights into the labor market, alongside data on job openings, private payrolls, and the ISM manufacturing PMI.
US President Donald Trump has warned of mass federal job cuts if Congress fails to pass a funding bill, effectively putting his own government at risk and threatening further disruptions to federal operations.
On Monday’s regular session, Wall Street started the week on a strong footing, lifted by a rebound in artificial intelligence shares. The Dow Jones advanced 0.15%, the S&P 500 climbed 0.26% and the Nasdaq surged 0.48%, led by tech and AI-focused companies. Nvidia gained by 2.1%, while AMD and Micron Technology rose 1.2% and 4.2%, respectively.
President Trump signed a proclamation on Monday imposing a 10% tariff on lumber imports and a 25% tariff on vanities, kitchen cabinets, and upholstered wooden products. The proclamation states that the tariffs will take effect on October 14, Reuters cited the White House.
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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