Dow Jones futures rise due to strong earnings from tech heavyweights, US PCE eyed

Dow Jones futures climb following strong profit results from tech heavyweights.
Meta rose around 12%, while Microsoft advanced about 8%.
Traders await US Personal Consumption Expenditures - Price Index data on Thursday.

Akhtar Faruqui FXStreet

Dow Jones futures advance ahead of the US market opening on Thursday, trading around 44,800, up by 0.38%, during European hours. Meanwhile, S&P 500 futures are sharply up by 1.07% to near 6,460, and Nasdaq 100 futures appreciate 1.45% to trade near 23,800. The US Personal Consumption Expenditures (PCE) - Price Index data will be eyed later in the day, which is expected to accelerate slightly.

US stock index futures rose sharply following strong profit earnings from tech heavyweights. Meta soared approximately 12% following strong quarterly results and an optimistic Q3 sales forecast. Microsoft climbed about 8% after exceeding earnings expectations and disclosing that annual revenue from its Azure cloud business had topped $75 billion.

However, regular trading saw declines on Wednesday after the US Federal Reserve (Fed) decided to hold its benchmark federal funds rate in a range of 4.25%-4.5% at its July meeting on Wednesday, as widely expected. However, the decision was not unanimous, as Fed Governors Michelle Bowman and Christopher Waller voted in favor of a 25 basis-point rate cut.

Fed Chair Jerome Powell said in a post-policy conference that the US central bank has "made no decisions" about a potential policy change in September, and it may take a bit to assess the effect of tariffs on consumer prices.

US President Donald Trump announced a new trade deal with South Korea, imposing a 15% US tariff on imports from South Korea. Moreover, the deal also includes a $350 billion commitment from South Korea toward US-owned and controlled investments. US Commerce Secretary Howard Lutnick said that the United States (US) has made trade agreements with Cambodia and Thailand.

Dow Jones FAQs

What is the Dow Jones?

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.

What factors impact the Dow Jones Industrial Average?

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.

What is Dow Theory?

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.

How can I trade the DJIA?

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.

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