- The Dow Jones fell somewhat on Friday, reaching 44,300.
- Despite the quiet end to the week, stocks are poised for a strong bullish close.
- US PMI data came in more mixed than expected, and had little impact.
The Dow Jones Industrial Average (DJIA) fell on Friday, falling nearly 200 points on a slow trading day. The Dow Jones is closing out a strong bullish week, with the index up about 2.3% from Monday’s opening bid. The Dow Jones Industrial Average rose for the second week in a row, strongly signaling the return of the bull market after a six-week decline.
President Donald Trump fanned the flames of pro-equality sentiment this week by not imposing the first-day tariffs he promised during his campaign. He also announced this week that he will “demand” interest rate cuts from the Federal Reserve (Fed) and plans to request lower oil prices from Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC).
The results of the January S&P Global Purchasing Managers’ Index (PMI) survey were more mixed than analysts expected. According to a vague number of survey respondents, companies have seen a better-than-expected improvement in future growth prospects in the manufacturing sector. However, service-based companies are more desperate about future business conditions than expected.
The January manufacturing PMI rose to 50.1 from 49.4 in the previous month, beating expectations of 49.6. The Services PMI for the same period contracted to 52.8 from 56.8, well below the expected 56.5, but still in positive territory overall, meaning that PMIs who bothered to respond to the survey are not expecting significant growth next month; that. We don’t expect a complete downturn in business conditions either.
Dow Jones News
Despite some sharp losses in major overweight stocks that sent the Dow Jones down slightly on Friday, the index itself is roughly in balance, with about half of the stocks on the board still finding higher ground to conclude the trading week. Walt Disney Co. (DIS) stock rose 1.8% to $113 per share, mainly on expectations that past performance is indicative of future results after the entertainment monolith returned 24% through 2024 to people who own its shares. On the downside, Nvidia (NVDA) stock fell 2.5%, falling below $144 per share as investors fear the company is doomed now that its run of 100% annual revenue growth is over.
Dow Jones price forecast
The Dow Jones Industrial Average once again reached the record highs of more than 45,000 points set late last November. The Dow Jones Industrial Average initially fell 7.4% from top to bottom during a six-week decline after setting the new record, but the wheels are back on the road as buyers continue to lean toward risk appetite.
The Dow rose 6.8% from its January low to 41,730, testing the 44,500 area after closing in the green for all but one of the last nine straight trading sessions. The immediate barrier to new record highs will be the 45,000 key handle, while a pullback to the 50-day Exponential Moving Average (EMA) near 43,275 could hamper the upside momentum.
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average is one of the oldest stock market indexes in the world, consisting of the 30 most actively traded stocks in the United States. The index is price-weighted and not market capitalization-weighted. It is calculated by summing the component stock prices and dividing them by a factor that currently amounts to 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years, it was criticized for not being broadly representative enough because it tracks only 30 conglomerates, unlike broader indices such as the S&P 500.
There are many different factors that drive the Dow Jones Industrial Average (DJIA). The overall performance of the constituent companies disclosed in the company’s quarterly earnings reports is the headline performance. US and global macroeconomic data also contribute to its impact on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also affects the Dow Jones Industrial Average because it affects the cost of credit, on which many companies rely heavily. Therefore, inflation can be a key driver along with other metrics that influence the Fed’s decisions.
Dow Theory is a method of determining the fundamental trend of the stock market developed by Charles Dow. The basic step is to compare the trend of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Size is a confirmatory criterion. The theory uses elements of peak and trough analysis. Dow Theory postulates three phases of a trend: accumulation, when smart money starts buying or selling; Public participation, when the wider public joins in; And distribution, when the smart money comes out.
There are a number of ways to trade the DJIA. The first is the use of ETFs that allow investors to trade the Dow Jones Industrial Average as a single security, rather than having to buy shares in all 30 component companies. A leading example of this is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures allow traders to speculate on the future value of an index and options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to purchase a share of a diversified portfolio of DJIA stocks and thus provide exposure to the overall index.
