Dow Jones futures pares its daily losses but remain in the negative territory, declining by 0.13%, trading above 49,400 during the European hours on Friday, ahead of the United States (US) regular opening. Meanwhile, S&P 500 and Nasdaq 100 futures inch higher 0.13% and 0.62% to near 7,150 and 27,100, respectively.
US stock futures traded mixed after US President Donald Trump said Israel and Lebanon agreed to extend their ceasefire by three weeks. Lebanon is expected to seek a one-month extension in a second round of direct talks in Washington, though Israel’s UN Ambassador Danny Danon said that the outcome is “not 100%” certain.
Nasdaq 100 futures are supported by a surge in Intel shares, which jumped more than 19% in extended trading after beating first-quarter earnings estimates and issuing a strong outlook. Sentiment was further boosted after Tesla CEO Elon Musk signaled potential spending of about $3 billion with Intel, tapping its chip fabrication capabilities.
In regular US trading on Thursday, Wall Street closed lower, with the Dow Jones falling 0.36%, the S&P 500 declining 0.41%, and the Nasdaq 100 dropping 0.89%, led by losses in technology and financial stocks. Both the S&P 500 and the tech-heavy Nasdaq Composite reached new intraday highs on Thursday but closed lower.
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.
