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Dow Jones Marches to New Highs Above 34,000 On Positive Earnings, US Data

FTSE 100
FTSE 100

The Dow Jones was one of the US markets that marched to new record highs this Thursday, after strong retail sales data, lower-than-expected initial jobless claims data and lower US long-term bond yields all combined to give the markets an uplift.

The number of applicants for first-time unemployment benefits dropped from the upward revision of 296K last week, to 576K, which was lower than the market consensus of 703K. This marked a new one-year low for this data set, indicating that the stimulus checks and the better-than-expected job additions in the NFP report were starting to take effect. 

Stimulus checks can also be said to have helped retail sales recover from a slump of 2.7% in the last report to a strong 9.8% this time around. The market expectation stood at 5.8%, which was thoroughly taken out by the numbers. 

Long-term bond yields on the 10-year Treasury note also fell nearly 5% on the day, sending investment capital out of the bond market and into growth stocks. Leading the charge on the Dow Jones were stocks linked to communications and banking, as traders sought to consolidate on positive earnings results in what has been a good week for the US indices. The Dow is up 0.66% and has cleared the 34,000 psychological price barrier.

Technical Outlook for Dow Jones

The steady uptrend remains intact, with the Dow now targeting the 127.2% Fibonacci extension at 34216, having cleared the 34,000 psychological resistance. Above this level, the 141.4% Fibonacci extension at 35109 comes into the picture. 

On the flip side, a pullback could result from profit-taking, retesting 34000 and 33249 initially. If the retracement extends further to the downside, 32666 and 32084 could come into the picture as additional downside targets.  

Dow Jones Daily Chart