- UnitedHealth collapses up to 23% after cutting the forecasts for the whole year, dragging the health sector and the Dow.
- Trump criticizes Powell’s hesitation, praises the ECB fees, and calls the Fed “too late” while inflationary fears persist.
- Powell points out the difficulty of balanceing mandates, feeding stagning concerns; Markets value only 9% probability of cuts in May.
The Dow Jones industrial average (DJIA) collapsed more than 500 points on Thursday, or more than 1.30%, and the actions of UnitedHealth Group (UNH) fell 23% after a disappointing gain report and a pessimistic perspective for the whole year. The Djia fell below the 39,500 mark, while the anger of US President Donald Trump towards the president of the Fed, Jerome Powell, revived after Powell’s speech in Chicago.
The Djia falls below 39,500 after UNH’s profits shock; Powell’s stanflation warning and Trump’s criticism of Fed shake off the feeling
Trump commented that the Fed should have trimmed the rates since oil prices, food and eggs are going down. He praised the previous decision of the European Central Bank (ECB) to cut rates, but added that the Fed is “too late” to soften the policy.
On Wednesday, the president of the Fed, Powell, adopted a cautious position saying that the approach is in inflation. However, he acknowledged that balancing dual mandates is becoming difficult, suggesting that a stagflation scenario is coming in which prices increase despite the fact that economic growth stagnates.
The US labor market remains solid after the report of initial applications for unemployment subsidy of April 12. Meanwhile, housing data were mixed, with construction permits showing that plans to build houses increased, while the beginnings of homes showed that housing construction is slowing down.
Meanwhile, President Trump said he has a lot of confidence in a commercial agreement with the European Union (EU) and China.
Recent data suggested that the operators see 9% probability of a Fed rates cut at the May meeting. Therefore, US actions remain susceptible to commercial tensions and geopolitical clashes.
Dow Jones price forecast
The Dow Jones still has a bearish trend, with the index falling below the 39,000 brand for the first time in five days of negotiation. However, the bulls are still stubborn and raised the index above the figure of 39,000, which could pave the way for some consolidation within the range of 39,000–40,000.
If the bulls push the Dow above 39,984, this would turn the index positive and paved the way to test the 40,000. A rupture of the latter clears the road to 40,500, followed by the following key resistance in the maximum of April 1 in 40,909 and 41,000.
On the negative side, a fall below 39,000 means that the operators will aim at the minimum daily of April 10, 38,431.
Dow Jones Faqs
The Dow Jones Industrial Avenge, one of the oldest stock market indexes in the world, consists of the 30 most negotiated values ​​in the United States. The index is weighted by the price instead of capitalization. It is calculated by adding the prices of the values ​​that compose 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 rates such as S&P 500.
There are many factors that promote the Dow Jones Industrial Average (DJIA) index. The main one is the added performance of the companies that compose it, revealed in the quarterly reports of business benefits. The American and world macroeconomic data also contribute, since they influence investor confidence. The level of interest rates, set by the Federal Reserve (FED), also influences the DJia, since it affects the cost of credit, on which many companies depend largely. Therefore, inflation can be a determining factor, as well as other parameters that influence the decisions of the Federal Reserve.
Dow’s theory is a method to identify the main trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Avenge (DJIA) and the Dow Jones Transportation Average (DJTA) and just follow the trends in which both move in the same direction. The volume is a confirmation criterion. The theory uses elements of maximum and minimum analysis. Dow’s theory raises three phases of the trend: accumulation, when intelligent money begins to buy or sell; Public participation, when the general public joins the trend; and distribution, when intelligent money abandons the trend.
There are several ways to operate with the DJ. One of them is to use ETF that allow investors to negotiate the DJ as a single value, instead of having to buy shares of the 30 companies that compose it. An outstanding example is the SPDR Dow Jones Industrial Avenge ETF (day). Future contracts on the DJ allow the specular operators about the future value of the index and the options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Investment funds allow investors to buy a part of a diversified portfolio of DJ values, which provides exposure to global index.
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.
