Dow Jones futures stay silent as traders await Fed Powell’s remarks, earnings reports
- Dow Jones futures move little due to market caution ahead of Fed Chair Jerome Powell’s speech.
- US stock indices may further appreciate on robust performance in technology shares.
- AMD jumped 11.4% on OpenAI partnership optimism, while Nvidia gained 2.2% amid rising computing demand on Wednesday.
Dow Jones futures remain steady near 46,850 during European hours on Thursday, ahead of the regular session opening in the United States (US). The S&P 500 futures hover around 6,800, while Nasdaq 100 futures inch higher 0.03% to stay near 25,350.
US index futures move little as traders adopt caution ahead of the speech by Federal Reserve (Fed) Chair Jerome Powell due later in the North American session. The major indices advanced to new record levels in the previous session, supported by robust performance in technology shares.
Market sentiment also improved following the latest Federal Open Market Committee (FOMC) Meeting Minutes, suggesting policymakers are leaning toward a dovish stance this year. The CME FedWatch Tool suggests that markets are now pricing in a 92.5% chance of a 25-basis-point Fed rate cut in October and an 78% possibility of another reduction in December.
Fed members noted it would likely be appropriate to ease policy further by the year-end. Some policymakers highlighted that the financial conditions suggest policy may not be particularly restrictive. Most participants judged downside risks to employment to have increased, while upside risks to inflation had either diminished or not increased.
Market sentiment may remain cautious as the US government shutdown continues its ninth day with no sign of progress. On Wednesday, the US Senate again rejected competing funding proposals from Republicans and Democrats to end the impasse.
On Wednesday’s regular session, the Dow Jones ended with little movement, while the S&P 500 rose 0.58% and the Nasdaq 100 added 1.12%, reaching fresh records. Strength in AI-related megacaps and semiconductor stocks drove the rally. AMD climbed 11.4% following a positive market reaction to its OpenAI partnership, while Nvidia rose 2.2% after CEO Jensen Huang highlighted a substantial increase in computing demand this year. Traders now await earnings reports from Delta Air Lines and PepsiCo 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.
