Dow Jones Jumps Higher On Reopening And COVID-19 Vaccine
The Dow Jones set to open sharply higher as indicated by the futures contract. Investors cheer on the reopening on many businesses as more and more states in the U.S. ease the coronavirus restrictions. The new coronavirus infections and deaths have dropped in many countries as the economies gradually reopening.
Fed Chairman Jerome Powell said during the weekend that a full U.S. recovery might take until the end of 2021 and might require the development of a coronavirus vaccine. Powell rejected for one more time the case for negative interest rates but reiterated that there is no limit to what the Fed can do with the lending programs that we have. President Donald Trump, last week for the first time, supported a strong dollar.
The strong rebound in crude oil which trades above $30 per barrel for the first time since March and positive data from Moderna’s coronavirus vaccine also helps investor’s sentiment.
On the other hand, the U.S.-China trade tensions rise over the weekend, as U.S. administration raised threats over Huawei Technologies. U.S. preparing plans to push American companies to move operations or key suppliers out of China, including tax breaks and subsidies.
Dow Jones ended 0.25% higher on Friday at 23,685 as the index managed to test the 50-day moving average on Thursday and bounced back. Today the futures point for an opening 400 points higher close to previous week higher. The positive picture for the short term is intact while the longer-term outlook remains bearish.
On the upside, first resistance for the Dow Jones Industrial stands at 24,126 the futures daily high. A move above might test 24,381 the high from May 12. The next supply zone for the index is at 24,986 the high from March 10.
On the downside, initial support for Dow Jones Industrial Average is at 23,538 the futures daily low. Next strong support for the Dow Jones index will be met at 23,217 the low from May 15. A break below 23,217 might open the way for a test of 22,703 the 50-day moving average.