Dow Jones Industrial Average grinds flat on Monday after US data miss
Dow Jones kicks off the new trading week with overcorrection in both directions.
US data missed the mark on Monday, sparking a brief rally on rate cut hopes.
Too-big of a dip in US data, plus a muddy election outlook, reignites recession fears.
The Dow Jones Industrial Average (DJIA) briefly rallied on Monday after a broad miss in key US data sparked a risk rally on renewed rate cut hopes. Still, the steep decline in manufacturing figures proved too much for investors to stomach. Equities gave up early gains and tumbled back into the day’s opening range.
June’s US ISM Manufacturing Purchasing Managers Index (PMI) broadly missed the mark on Monday, ticking down to 48.5 from the previous 48.7 and missing the forecast step up to 49.1. The economic indicator has spent a third consecutive month below the key 50.0 level, flashing ongoing warning signs of a broader slowdown creeping up within the US domestic economy.
ISM Manufacturing Prices Paid also declined in June, tumbling to a six-month low of 52.1 from the previous 57.0, falling well below the forecast decline to 55.9. With inflationary pressures easing, US markets initially jumped at the outset of the new trading week as investors continue to hope for softening economic figures to push the Federal Reserve (Fed) into an accelerated pace of rate cuts. However, too-steep of a drag in US data points could easily tip the US into a recession that rate cuts won’t overcome, sparking risk-off fears and trimming Monday’s early gains.
The Dow Jones is split down the middle on Monday, with half of the index’s constituent securities in the red for the day. Merck & Co Inc. (MRK) leads the gainers, climbing 3.5% and gaining 4.3 points to trade into $128.11 per share. On the low side, Unitedhealth Group Inc. (UNH) fell back 2.66%, falling 13.78 points to $495.48 per share.
Dow Jones technical outlook
Sideways churn is the name of the game for the Dow Jones as the major equity index grinds out a rough near-term lateral channel. The DJIA is cycling just above the 39,000.00 handle as bidders refuse to let the Dow decline but lack the necessary momentum to reclaim higher chart territory.
Daily candles continue to churn out a growing consolidation pattern as the Dow Jones gets strung along the 50-day Exponential Moving Average (EMA) at 38,908.22. The DJIA continues to hold on the high side of late May’s bottom near 38,000.00, but topside momentum remains unable to recover ground back to all-time highs set just north of the 40,000.00 major price handle in May.
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.
Dow Jones Industrial Average grinds flat on Monday after US data miss. Dow Jones kicks off the new trading week with overcorrection in both directions. US data missed the mark on Monday, sparking a brief rally on rate cut hopes. Too-big of a dip in US data, plus a muddy election outlook, reignites recession fears.
The 1987 stock market crash, or Black Monday, is known for being the largest single-day percentage decline in U.S. stock market history. On Oct. 19, the Dow fell 22.6 percent, a shocking drop of 508 points.
When the Dow gains or loses a point, it reflects changes in the prices of its component stocks. The index is price-weighted, meaning it moves in line with the price changes of its components on a point basis, adjusted by a divisor.
Based on 32 Wall Street analysts offering 12 month price targets to DJIA holdings in the last 3 months. The average price target is $24.55 with a high forecast of $27.90 and a low forecast of $20.55. The average price target represents a 7.52% change from the last price of $22.83.
Dow plunges more than 1,000 points amid fears of U.S. economic slowdown. Stocks in the U.S. plunged for a third consecutive trading day, with the Dow Jones Industrial Average tumbling more than 1,000 points amid growing fears of an economic downturn sparked by a slowdown in hiring and consumer spending.
While many experts are making predictions about whether the market will crash in 2024 or how severe the next downturn will be, it's impossible to say with certainty where stock prices will be in the short term. However, the market's long-term performance is all but guaranteed to be positive.
The statistic shows the best years of the Dow Jones Industrial Average index from 1897 to 2023. The best year in the history of the index was 1915, when the index value increased by 81.66 percent to close at 99.15 points compared to 54.58 in the previous year.
Usually, when the stock market crashes, this can halt economic growth throughout the region. This means that the government may choose to reduce spending, companies may not have access to funding for expansion or operations, and investors may run into many losses on their open positions.
The index is maintained by S&P Dow Jones Indices, an entity majority-owned by S&P Global. Its components are selected by a committee. The ten components with the largest dividend yields are commonly referred to as the Dogs of the Dow.
The result is the DJIA is affected only by changes in the stock prices, and stocks with a higher share price have a larger impact on the Dow's movements.
The bank's analysts give a positive forecast for the Dow Jones exchange rate in 2024. In their opinion, index quotes will increase by 10% to $40,000 in 2024. If the US economy avoids recession, growth could reach up to 19%. This scenario is more likely due to cooling inflation and stable GDP growth.
The calculation of the Buffett Indicator involves dividing the total market value of all publicly-traded stocks within a country by the country's Gross Domestic Product (GDP). By comparing the stock market's size to the overall economic output, this ratio provides insights into the relative valuation of the market.
Historically, the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite's worst average monthly returns have been in September—making the ninth month of the year notorious on Wall Street.
Using the 12 largest single-day down moves over the last 3 years in SPY stock, the average move was -3.4% with the single largest daily move of -4.3% occurring on 13-Sep-2022. The following day, SPY stock price averaged -0.3% losses, with up moves and down moves occurring equally.
October 19, 1987: S&P 500 registers its largest daily percentage loss, falling 20.47 percent. The one-day crash, known as "Black Monday," was blamed on program trading and those using a hedging strategy known as portfolio insurance.
The Dow Jones hits 40,000 points for the first time ever : NPR. The Dow Jones hits 40,000 points for the first time ever Stock markets received a boost from new data showing inflation is easing. Lower inflation has raised hopes about the U.S. economy — but there are still a lot of unknowns.
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