Dow Jones futures tick up as Apple Inc. pledges $100 billion investment in the US
- Dow Jones futures trade marginally higher due to multiple tailwinds.
- Apple Inc. pledges $100 billion investors to boost domestic manufacturing.
- US President Trump announced 100% tariffs on imports of semiconductors.
Dow Jones futures trade marginally higher during the European trading session on Thursday. United States (US) equities edge up as significant gains in technology companies have overcome weakness in rest of industries.
At the time of writing, Dow Jones futures gain 0.1% above 44,200, S&P 500 futures advance 0.3% to near 6,360.
On Wednesday, NASDAQ soared 1.2% above 21,150 after US President Donald Trump confirmed that smartphone-maker Apple Inc. will invest $100 billion to accelerate domestic manufacturing facilities. "Companies like Apple, they’re coming home. They’re all coming home," Trump said to reporters, Reuters report. He added, "This is a significant step toward the ultimate goal of ensuring that iPhones sold in America also are made in America."
The announcement of increasing domestic iphones manufacturing by Apple Inc. has eased concerns regarding the increase in 100% tariffs on imports of semiconductors into the US. On Wednesday, US President Trump announced an increase in additional duty on imports of semiconductor chips to 100%. The manufacturing of smartphones by Apple domestically will not come under the purview of sectoral tariffs.
Meanwhile, the 100% semiconductor tariffs are not applicable on South Korea’s major chipmakers Samsung Electronics, and SK Hynix as Seoul they signed a deal with Washington last month.
Additionally, firm market expectations that the Federal Reserve (Fed) will cut interest rates in the September meeting have also supported US equities. According to the CME FedWatch tool, the Fed is almost certain to cut borrowing rates by 25 basis points (bps) to 4.00%-4.25%.
On Wednesday, Fed officials, including Minneapolis Fed President Neel Kashkari, San Francisco Fed President Mary Daly and Fed Governor Lisa Cook, argued in favor of reducing interest rates amid growing labor market concerns.
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.
