The Dow Jones index is holding steady ahead of key earnings by its constituent companies and as mergers and acquisitions continue. Futures tied to the DJIA index have risen by more than 110 points.
Dow Jones news: There are several things moving the Dow Jones. First, the index is reacting to the macro picture, where the labour market is tightening while inflation is rising. This has led many to start predicting that interest rates will start rising. Ideally, high rates tend to be bad for stocks. Still, the Dow Jones tends to outperform the Nasdaq 100 index in a high-interest rate environment. In a statement yesterday, Raphael Bostic of Atlanta Fed said that the bank would likely hold rate steady in the near term.
Second, the Dow Jones is rising as the earnings season comes to an end. According to FactSet, 91% of all companies in the S&P 500 index have released their results. Most of them have reported sharply higher revenue and earnings per share. This week, the Dow Jones will react to earnings of constituent companies like Walmart, Cisco, and Home Depot. Other firms that will release their earnings are Lowe’s and Target.
Third, the ongoing wave of mergers and acquisitions is affecting the index. Yesterday, AT&T announced that it would spin off its Warner Media business and merge it with Discovery to create a $150 billion media giant. And today, the Financial Times reported that Amazon was considering buying MGM in a deal valued at more than $9 billion.
Meanwhile, the Fear and Greed Index has fallen to 40, signaling that investors are still worried about interest rates and inflation.
Dow Jones technical outlook
The four-hour chart shows that the Dow Jones index is trading at $34,327, which is slightly above last week’s low of $33,557. This price was along the lower line of the ascending channel. The index remains above the 25-day and 50-day moving averages. While the MACD has formed a bearish divergence pattern, there is a possibility that the index will continue rising as bulls target the upper side of the channel at $35,110. However, a break below the support at $33,600 will invalidate this prediction.