Dow Jones: Likely Scenarios As Bank Earnings Start Streaming-In

Dow Jones
Dow Jones

The Dow Jones industrial average rose today as the market started to receive corporate earnings. Johnson and Johnson was the first major company to release its earnings. The company said that it made more than $20.7 billion, which was higher than the consensus estimates of $19.47 billion. The company made a net income of $2.30 per share and boosted its dividend from $0.95 to $1.01. However, the company slashed its outlook for the year to between $7.50 and $7.90 per share from the previous $8.95 and $9.10. This helped raise its stock by almost three per cent.

JP Morgan, the biggest bank in the United States also released its quarterly results. The company reported a 69% decline of net profit in the first quarter. The net income came at $2.9 billion was lower than $9.2 billion a year ago. The company said this was because it allocated almost $6.8 billion to provision of bad loans. This means that the bank expects more people and businesses to default on their obligations. In the financial statement, the bank said that the bank was pricing-in a severe recession because of the coronavirus pandemic.

The bank received extra deposits worth $270 billion. Its investment banking revenue declined by 49% while its markets revenue rose by 32 per cent to $7.2 billion. In response, its share price fell by 1% in the premarket.

In the coming days, other big companies such as Blackrock, Morgan Stanley, and Goldman Sachs will release their quarterly earnings.

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Dow Jones Technical Analysis

Looking at the four-hour chart, the Dow Jones index is at an important level. It is at the 50% Fibonacci Retracement level as the earnings season kicks-off. The Fibonacci was drawn by connecting the YTD high and the YTD low. The index is also in the third phase of the Elliot Wave pattern.

This means that the third bullish phase will continue if the index manages to move above the 50% retracement level.

On the flipside, the index may find it difficult to move above the 50% retracement level, which will see it move lower to the 38.2% level of $22493.

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