Dow Jones set to open lower on Tuesday following blockbuster run

Dow set to open lower

The Dow Jones Industrial Average (DJIA) capped off a blockbuster string of bullish trading sessions on Monday, with the index rising a further 461 points or 1.70% to finish out Monday at the 27,572 point level.

The S&P 500 and the Nasdaq Composite have also traded positively over the last week, with the tech-heavy Nasdaq hitting an all-time high on Monday.

An improving economic outlook

The main catalyst behind Friday and Monday’s run-up looks to be better-than-expected jobs data, which saw the US unemployment rate drop to 13.3% – as well as increasing optimism around the prospect of a rapid US economic recovery.

Looking at the specifics behind Friday’s economic data release, IG Market Analyst Kyle Rodda said:

‘The Non-Farm Payrolls data came in far stronger than expected, revealing that the US economy added approximately 2.5 million jobs in May, driving the US unemployment rate down to 13.3 per cent. Economists’ estimates were for the US economy to have lost -7.75 million jobs in the month, with the unemployment rising to 19.4 per cent.’

Mr Rodda went on to say that:

‘While questions about data collection and other measurement quirks have been raised as potentially reasons for the huge surprise, the markets have taken it as a sign that the US economy is in a far better position than previously imagined.’

In step with this bolstered sentiment shift, on Monday the best performing Dow constituents were Boeing (+12.20%), Dow (+4.39%) and Walgreens Boots Alliance (+3.68%); while the worst performing US equities were Intel, UnitedHealth and Johnson & Johnson.

Ultimately, though the Dow has registered gains during the last six trading sessions – futures markets suggests that the US benchmark will break that winning streak during the open on Tuesday. According to IG data, as of 12:35am (EDT), Dow Jones futures are trading 42 points or 0.16% lower.

Elsewhere, futures markets are also suggesting that the S&P 500 index and the Nasdaq Composite will open lower on Tuesday.

Events for investors to watch out for

Looking forward, Core CPI and Consumer price index data for May will be released on Wednesday, initial jobless claims for the week ending June 6 will be released on Thursday, and Consumer sentiment index data (June) will be released on Friday.

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