Dow Jones Industrial futures are set for a lower open with the index down 230 points (0.80%) in early trading. The Dow has been on fire since Monday with a test of the 30,000 level, which set an all-time high.
The Dow has been supported by news of a potential coronavirus vaccine by drugmaker Pfizer. This has led to talk of a rotation from tech stocks into value stocks and “bricks and mortar” retailers, such as Starbucks and Home Depot. The Nasdaq confirmed this was in play with a steep two-day drop to start the week as the ‘work from home’ and online shopping booms risk grinding to a halt.
Two Dow constituents are set to release earnings after the bell today with Disney and Cisco Systems delivering results. For Cisco its Q1 and full-year 2020 numbers, with the company seeing revenue growth of only $150 million since January. Disney will release their fourth-quarter 2020 and full-year results. Disney has struggled with the lockdowns and virus with revenues dropping from $20.85 billion at the end of 2019 to $11.8 billion in Q3 2020. This is one Dow company that would benefit from a vaccine and a return to normal business at their parks.
One headwind for the Dow has been a cooling in the vaccine buzz and it was reported that the chairman and CEO of Pfizer, which announced the successful Phase 3 trial on Monday, had sold $5.6 million worth of stock in the company on the same day. The sale was part of a pre-planned program but it still raises questions again about why vaccine makers are selling out of their companies. Traders are also unsure whether a vaccine really can be delivered by December.
Dow Jones Technical Oulook
Dow Jones futures are pointing to a lower open with the price failing to hold above the 30,000 level. The September 3rd high is just below and this will determine whether the index can squeeze higher or see a larger correction. Bearish traders could wait for a close below that level to go short with a stop above today’s open or Wednesday’s high. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.
Dow Jones Daily Chart