Dow Jones Industrial Average turns negative and challenges 39,000


  • Dow Jones gives away initial gains as investors digest Powell, US services data. 
  • US Services activity softened against expectations in March with the Prices Paid sub-index posting its lowest reading in years. 
  • Intel is leading losses in the Dow Jones after news of hefty losses in its foundry business.

The Dow Jones Industrial Average (DJIA) has returned to negative territory as Tuesday's session draws to a close. The soft US services activity data has offered some relief to investors, increasingly concerned that a string of strong US macroeconomic releases would force the Fed to dial down their monetary easing plans.

The US ISM Services PMI eased to 51.4 in March from 52.6 in February against market expectations of a slight increase to 52.7. Beyond that, the Prices Paid sub-index retreated to 53.4 from 58.6 in the previous month. This is the lowest reading in years and suggests a disinflationary contribution to the economy. These figures have offset the impact of strong ADP employment figures and the hawkish comments by Fed Chair Powel and Atlanta Fed President, Bostic.

All three main Wall Street Indexes have jumped after the release of the ISM Services PMI report. The NASDAQ is leading gains with a 0.5% advance to 16,319, followed by the S&P 500, up 0.3% to 5,223 and the Dow Jones is lagging with a 0.1% advance, trading at 39,220, still well below the 40,000 high hit last week.

Dow Jones news

The Industrials sector is the best performer with a 0.75% advance followed by materials, which adds 0.66% on Wednesday. On the losing end, only two of the eleven sectors are in the red with Consumer Staples losing 0.95% followed by the Utilities, down 0.1%.

Down to single stocks, the market is showing a more mixed picture. Intel (INTC) fell 7% to $40.78 hammered by a report stating that its foundry business recorded an operating loss of $7 billion in 2023.

Next is Procter & Gamble (PG), down 2.36% to $156.81, and Johnson & Johnson (JNJ), losing 1.6% to $155.19.

On the positive side, Caterpillar (CAT) advances 2.3% to $373.252, followed by Amazon (AMZN), which is 1.07% up at $182.63.

Dow Jones technical outlook

The technical picture is little changed from Tuesday, with the Dow Jones Index correcting lower, yet with the broader bullish trend still intact. Price Action remains contained between the 50% and the 61.8% Fibonacci retracement of the March rally, at 39,300, with bears in control after the rejection at the 40,000 psychological level last week. 

The 39,000 support area is holding sellers for now and closing the path to the trendline support, now at 38,850. On the upside, the index is struggling to breach the mentioned 50% Fibonacci retracement at 39,195. Further up at 39,457 and the mentioned 40,000 would be the next targets.

Dow Jones 4-Hour Chart

DowJones-Chart

 

 

 

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.

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD retreats below 1.0650 after upbeat US data

EUR/USD retreats below 1.0650 after upbeat US data

EUR/USD lost its traction and declined below 1.0650 in the early American session on Monday. The upbeat Retail Sales data from the US helped the US Dollar regather its strength and caused the pair to turn south.

EUR/USD News

USD/JPY sits at multi-decade high near 154.00 as Japan's intervention risks loom

USD/JPY sits at multi-decade high near 154.00 as Japan's intervention risks loom

USD/JPY is sitting at multi-decade highs shy of 154.00 in the European session on Monday. The Japanese Yen continues to be undermined by the BoJ’s uncertain outlook about future rate hikes. Intervention fears and persistent geopolitical tensions could help limit losses for the safe-haven JPY. 

USD/JPY News

Gold continues to fluctuate at around $2,350

Gold continues to fluctuate at around $2,350

Following a bullish opening to the week, Gold went into a consolidation phase at around $2,350 on Monday. The benchmark 10-year US Treasury bond yield is up nearly 2% after strong US data, not allowing XAU/USD to push higher.

Gold News

XRP price recovers from nearly eleven month low of $0.41 as developers propose native lending on XRPLedger

XRP price recovers from nearly eleven month low of $0.41 as developers propose native lending on XRPLedger

Ripple price recovered from weekend low of $0.4188, surged past $0.50 on Monday. XRPLedger developers have proposed a Native Lending Protocol to help Ripple establish a foothold in DeFi, lending and borrowing for users. 

Read more

Week ahead: Data from the US, UK and Canada in focus

Week ahead: Data from the US, UK and Canada in focus

Similar to Fed and ECB pricing, swaps traders have scaled back bets of rate cuts for the Bank of England (BoE’s) Bank Rate to below 50bps for the year.

Read more

Forex MAJORS

Cryptocurrencies

Signatures