- The Dow Jones Industrial Average rose 1.94% last week and has also advanced slightly this week.
- Initial claims for unemployment benefits in the US were well below expectations.
- Durable goods orders fell 5.4% mom, well below consensus.
- Preliminary manufacturing and services PMIs will be released on Friday during a shortened trading session.
On Wednesday, before the Thanksgiving holiday, the Dow Jones Industrial Average (DJIA)) outperformed the NASDAQ Composite (0.46%) and the S&P 500 (0.41%). The DJIA rose 0.53%, thanks to Microsoft (MSFT) and The Home Depot (HD) They added up to just under 1.3%.
The DJIA rose 1.94% last week, its third week of gains, and has been gaining steam this week as well. The profits of Nvidia (NVDA) They were an impressive surplus late Tuesday, but the top semiconductor stock closed down 2.5% on Wednesday.
The decline in initial jobless claims is showing that the US labor market is not collapsing as some estimated last week, but durable goods orders fell much more than the market expected.
Dow Jones News: Hardline FOMC Minutes Fail to Deter Bulls
Nvidia’s earnings may not have meant much to Nvidia itself, as expectations were so high, but the market seems to be benefiting from them. Wall Street’s three major indexes opened higher on Wednesday. The company’s CEO, Jensen Huang, raised his fourth-quarter profit forecasts by more than $2 billion, a development that seems unlikely if a recession were on the horizon.
The minutes of the Federal Open Market Committee (FOMC) released on Tuesday have also failed to alter the bullish fundamentals of the market. The CME Group’s FedWatch tool has put the odds of an interest rate cut at 62% for the Federal Reserve’s May meeting. At the March meeting, the odds of a cut remain close to 29%.
The Fed left the door open to more increases, but the market does not agree. The soft landing thesis continues to lead the narrative. Initial jobless claims for the week ending November 18 stood at 209,000, well below the consensus of 225,000. Still, it was a positive data, since the unemployment rate was below consensus. Still, it was a positive reading, as it was a decrease of 24,000 from the previous week’s reading of 233,000 (revised upward by 2,000). However, what the market wants are calm and discouraged initial jobless claims, as they indicate that the labor market remains healthy, but at a level low enough not to activate the Fed hawks.
October durable goods orders fell 5.4%, instead of the 3.1% expected. This could be a seasonal decline, but a significant drop below consensus for November could worry the market.
The Michigan Consumer Sentiment Index for November stood at 61.3, above the consensus of 60.5 and 60.4 the previous month. S&P Global manufacturing and services PMIs will be released on Friday.
Frequently Asked Questions About the Dow Jones
What is the Dow Jones?
The Dow Jones Industrial Average, one of the world’s oldest stock indices, is made up of the 30 most traded securities in the United States. The index is weighted by price rather than capitalization. It is calculated by adding the prices of the securities that comprise it and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, also founder of the Wall Street Journal. In recent years it has been criticized for not being sufficiently representative, since it only follows 30 companies, unlike broader indices such as the S& P 500.
What factors influence the Dow Jones index?
There are many factors that drive the Dow Jones Industrial Average (DJIA). The main one is the aggregate performance of its component companies, revealed in quarterly corporate earnings reports. US and global macroeconomic data also contribute, influencing 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 companies largely depend. Therefore, inflation can be a determining factor, as well as other parameters that influence the decisions of the Federal Reserve.
What is the Dow theory?
The Dow Theory is a method for identifying the main 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 confirmation criterion. The theory uses elements of maximum and minimum analysis. The Dow theory proposes three phases of the trend: accumulation, when the smart money begins to buy or sell; public participation, when the general public joins the trend; and distribution, when the smart money abandons the trend.
How can I trade with the DJIA?
There are several ways to trade the DJIA. One of them is to use ETFs that allow investors to trade the DJIA as a single security, instead of having to buy shares of the 30 companies that comprise it. A prominent example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts allow 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 allow investors to purchase a portion of a diversified portfolio of DJIA securities, providing exposure to the global index.
Dow Jones Industrial Average Forecast: Overbought After November Recovery
The Dow Jones Index has broken through late August highs over the past week and is now aiming to hit the August 1 high sometime in December. That high of 35,679 was the highest level the index has reached in about 18 months, and a close above that level means the index is back in bullish territory.
In the short term, investors will notice that the Relative Strength Index (RSI) has reached overbought levels. This usually means a pullback is coming. If the resistance level of 35,000 turns into support, then the demand zone of 34,300 to 34,700 could serve. Otherwise, the 50-day moving average (SMA) is just below the consolidation zone from early November, just below 33,900.
Dow Jones Industrial Average daily chart
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
