Dow Jones futures point to higher mid-week opening for index
Dow Jones Industrial Average futures are trading slightly above the day index's last closing price, indicating the possibility of a higher opening on Wednesday.
US stock market index Dow Jones Industrial Average (DJIA) is trading mixed in pre-market hours on the IG platform.
This represents a slight increase from the previous day’s closing mark of 27,713.
While overnight market activities do not always translate into actual day trading patterns, this indicates a possibility that the index will open higher when regular trading resumes on Wednesday.
Meanwhile, IG’s market sentiment data shows that ‘buys’ currently form 50% of all trades on the counter and 51% of all orders so far this week.
Why did Dow Jones fall on Tuesday?
The Dow, which tracks the performance of 30 large cap US-listed companies, decreased 0.28% on Tuesday 18 August 2020, despite positive earnings released by retail chains Walmart and Home Depot.
Walmart reported a 9.7% year-on-year increase in Q2 net sales, while Home Depot saw sales for the second quarter soar 23.4%.
Reversely, those same stocks were able to help push the S&P 500 index, which tracks a much broader range of sectors and companies, to its highest closing price since February this year.
According to IG market strategist Pan Jingyi, investors can be seen going about carefully with elevated equity prices, choosing instead to stick with Covid-19 beneficiaries (such as Walmart and Home Depot) amid the sustained uncertainties.
‘In turn, this had seen the relatively cyclical heavy Dow industrial index lagging its more comprehensive counterpart,’ she wrote.
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What’s the immediate forecast for the Dow Jones index?
From a technical perspective, Pan says prices remain in an uptrend, but are clearly meeting resistance around the 28,000 level.
Short-term price consolidation is also underway, representing a healthy pause after prices briefly edged into overbought territory.
‘Watch for a retest of the 28,000 resistance and a breakout to signal continuity for the uptrend, while a slip past the uptrend support could mark the beginning of a turning of trend here,’ Pan noted.
Top-performing DJIA constituents in the last 24 hours on the IG platform include Nike (+0.5%), Apple (+0.43%) and Microsoft (+0.1%).
The biggest losers are: Chevron, Home Depot and United Technologies.
Across the week so far, top gainers have been: Merck & Co, Home Depot and McDonald's, with Cisco Systems, Exxon Mobil, American Express and Boeing making up the top losers.
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