Dow Jones futures gain as Trump proposes tariffs on copper and pharmaceuticals
- Dow Jone futures rises as Trump aims to boost copper production and manufacturing of pharmaceuticals domestically.
- US President Trump proposes 50% tariffs on imports of copper.
- Investors await new tariff rates for another batch of nations by the US.
Dow Jones futures trade higher during the European trading session on Wednesday. United States (US) equities attract bids as President Donald Trump has proposed 50% tariffs on imports of copper and signaled 200% import duty on pharmaceuticals at the cabinet meeting on Tuesday, aiming to boost production domestically.
At the time of writing, Dow Jones futures gain 77 points and rise above 44,100. S&P 500 futures rise 0.17% to near 6,235.
This marks the fourth product where the White House is set to increase tariffs, following, automobiles and auto parts, steel, and aluminum. US President Trump didn’t provide any timeline for tariffs on copper imports.
On pharmaceuticals, Trump stated that he will impose 200% tariffs likely in 2026 to provide ample time to domestic manufacturers for building capacity. The message through actions from the Fed that he is aiming to boost local manufacturing in various sectors has increased appetite of investors toward US equities.
Going forward, the start of the second-quarter earnings season is going to be the major trigger for US equities, with several leading financial corporations, including Blackrock, Citigroup, and JP Morgan Chase are set to announce their quarterly results on July 15.
Meanwhile, investors await the announcement of fresh reciprocal tariff rates for over seven countries by Donald Trump, which have failed to make deal during the 90-day tariff pause. On Tuesday, Trump stated through a post on Truth.Social that he will reveal new tariff rates for minimum of seven countries on Wednesday’s morning and more in afternoon. “We will be releasing a minimum of 7 Countries having to do with trade, tomorrow morning, with an additional number of Countries being released in the afternoon. Thank you for your attention to this matter!” Trump wrote.
The impact of the announcement would be limited if the list doesn’t involve leading trading partners of the US, such as Eurozone, Canada, Mexico. Till now, Trump has unveiled new tariff rates for 14 countries in which notable names were Japan and South Korea.
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.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
