- The Dow Jones index is looking for a foothold after a general market crisis.
- Stocks rose sharply on Tuesday, but are still at the bottom of the long list.
- Investors still dream of the Fed cutting interest rates, but “emergency cuts” are out of the question.
The Dow Jones Industrial Average (DJIA) pared losses Tuesday, gaining about 700 points after the index spent several days facing keen declines. Investors are recovering after a broad decline in key U.S. economic data sent risk sentiment plummeting and reignited market fears of a U.S. recession.
Markets have regained their composure after sending the Dow Jones down 7% from last week’s peak near 41,200.00, but Dow bidders will have to work challenging to get price action back into the upper range. The flow of US economic data has subsided for now, but hopes for a Federal Reserve (Fed) rate cut continue to smolder in the background.
Interest rate markets have fully factored in the September rate cut, and according to CME’s FedWatch tool, investors see a two-to-one chance of a double 50 basis point cut when the Federal Open Market Committee (FOMC) announces its rate position on September 18. At the current rate cut, interest rate markets see zero chance of the Fed keeping rates on hold in 2024, with a total of four quarter-percentage point cuts expected by the end of the year.
Dow Jones News
Most of the Dow Jones Industrial Average is in the green Tuesday, with only three of its stocks stubbornly holding on to the red. The initial loss was borne by Intel Corp. (INTC), which recently missed revenue estimates and lowered its third-quarter earnings guidance. Intel has regained ground, trading flat, but the tech company’s overall losses remain high. Citing low margins and struggling profitability, Intel’s revenue fell 1% to a total of $12.8 billion in the second quarter, missing analysts’ forecasts by $150 million.
After disclosing a revenue decline and missing guidance, Intel announced it would suspend its dividend in December and lay off about 10% of its workforce, or about 15,000 people. That comes after Intel received more than $8.5 billion in government subsidies at the beginning of the year, with the potential for another $11 billion in additional subsidies in the future.
Dow Jones Technical Outlook
The Dow Jones Industrial Average successfully fended off further declines as broad market sentiment improved, keeping the index above its 200-day exponential moving average (EMA) at 37,934.50. However, the DJIA is still far from July’s record highs of 41,371.38, and buyers have a long way to go back to record highs.
The 50-day EMA is expected to see an intraday move above the 39,632.50 level while buyers will look to support prices above the 38,500.00 level following Monday’s technical rebound from that price level.
