Dow Jones futures lose ground due to renewed US-China trade concerns
- Dow Jones futures decline as traders adopt caution after the US and China decided to charge additional port fees.
- China’s Commerce Ministry stated that Beijing “hopes to resolve concerns through dialogue.”
- Megacap tech stocks led Monday’s gains, with Tesla climbing 5.42%, Nvidia rising 2.88%, and Broadcom surging 9.88%.
Dow Jones futures fall 0.48% to trade below 46,100 during European hours on Tuesday, ahead of the opening of the United States (US) regular session. The S&P 500 futures slip 0.72% to move below 6,650, while Nasdaq 100 futures decline 0.91% to trade around 24,700 at the time of writing. Traders will likely observe the speech from US Federal Reserve (Fed) Chair Jerome Powell later in the day.
US index futures lose ground as market caution increases after the United States (US) and China decided to impose additional port fees on ocean shipping companies. The US is scheduled to start collecting fees on Tuesday. China also started to collect the special taxes on US-owned, operated, built, or flagged vessels, but stated that Chinese-built ships would be exempted from the levies. However, China’s Commerce Ministry said in a statement on Tuesday that Beijing “hopes to resolve concerns through dialogue.”
On Monday’s regular session, Wall Street started the week with gains, with the Dow Jones gaining 1.29%, the S&P 500 rising 1.56%, and the Nasdaq 100 advancing 2.21%, after US President Trump softened his stance on China, signaling openness to a deal just days after threatening 100% tariffs. Additionally, US Treasury Secretary Scott Bessent said Monday that President Trump remains committed to meeting China’s President Xi Jinping in South Korea this month to ease tensions over tariffs and export controls.
Megacap tech stocks led the gains, with Tesla advancing 5.42%, Nvidia rising 2.88%, and Broadcom surging by 9.88%. Shares of companies in quantum computing, clean energy, and rare earth sectors also outperformed. Investors now turn their focus to quarterly earnings from major banks such as JPMorgan Chase and Goldman Sachs, due later in the day.
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
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
