Dow Jones Rally Fades As Markets Brace For Record Jobless Claims

Dow Jones
Dow Jones

The Dow Jones is struggling to find direction ahead of the release of the initial jobless claims data. Futures tied to the Dow are down by 25 basis points as of 1045 GMT. Still, this is better than where the futures were when I published the FTSE 100 report earlier today.

Investors are anxiously waiting for what will be the worst jobless claims in US history. This is because many companies have shut down and laid of millions of workers. For example, in California, the governor recently called for a statewide lockdown, which means that very few businesses are operating. As a result, jobless claims in the state have surged to more than 1 million. Just last week, nationwide data showed that claims were about 281k.

Meanwhile, investors will likely cheer that the senate passed a $2.2 trillion stimulus package last night. The package will see the IRS send checks to millions of Americans. Companies too will receive hundreds of billions of dollars from the government.

The stock price of Boeing, a key beneficiary of the stimulus package, rose by more than 3% in premarket trading. Other companies in the Dow Jones that rose were Walmart and Intel. Most of the other Dow Jones components are in the red.

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Dow Jones Technical Analysis

Looking at the hourly chart, we see that the Dow Jones index made a significant breakout on Tuesday, when it moved above the upper resistance level. Meanwhile, the index has struggled to move above the Ichimoku cloud. This means that the index may have had a false breakout, which in this case would lead to further declines. I expect it to remain bullish if it moves past the Ichimoku cloud, at about $22,000 level.

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