The Dow Jones index rose by more than 800 points as a drug by Gilead showed signs that it could treat coronavirus. The revelation yesterday provide relief to investors, who have been worrying about the disease.
Still, very little details about the drug have been released. Also, the drug has been administered to a very small group of patients, meaning that there are potential risks of cheering the news.
Investors are also cheering Boeing after the company announced plans to restart some of its production after a three-week shutdown. While this is a good thing, the company has lost hundreds of orders during the current coronavirus pandemic. This is mostly because many airlines are currently troubled. Some, like South African Airlines, have no hopes of operating again. The company’s shares rose by 9% but remain close to record lows.
Another big mover in the Dow Jones index was Procter & Gamble, the consumer goods giant. The company reported a strong quarter, with organic sales rising by 6%. Total sales in the US rose by 10% to more than $17.21 billion as more people rushed to stockpile ahead of lockdowns. As a result, the company’s earnings came in at $1.17 per share.
The Dow Jones index also rallied as investors welcomed Trump’s strategy to reopen the economy. In a statement yesterday, the president said that the process will take three phases. He also said that the federal government would partner with states to coordinate the reopening.
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Dow Jones Technical Outlook
The Dow Jones has been on an upward trend since it bottomed at $18,135 in March. On the daily chart, the pair has managed to move above the 50% Fibonacci Retracement level. This is a major milestone because it is usually a sign of a sustainable rally. This Fibonacci was drawn by connecting the YTD low and high.
The current price of $24,228 is along the 50-day EMA. Therefore, I expect the index to continue rallying, with the next price target being at the 61.8% Fibonacci Retracement and 100-day EMA level at $25,350.
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