- The Dow lost about 350 points, or 0.8%, as stocks moved away from record highs.
- The bullish momentum is catching its breath, and the main burden is on the Dow Jones.
- Earnings season expectations battle with heightened interest rate concerns.
The Dow Jones Industrial Average (DJIA) took a hit on Monday, falling nearly 350 points and losing eight-tenths of one percent as stock markets rebounded from recent record highs. The Dow bore most of the bearish weight to start the fresh trading week, with losses consolidated mostly within the major stock index.
Bond yields rose on the day and construction stocks lost strength, and there were fresh concerns in the broader market that the Federal Reserve (Fed) would be forced to keep interest rates higher for an extended period of time. Despite delivering a massive 50-basis-point rate cut in September, investors disagree that the U.S. economy remains stubbornly resilient, suggesting it may take the Fed even longer than expected to finally bring core inflation back to its 2% annual target. .
Earnings season is in full swing for equity markets, and about one-fifth of S&P 500 companies are expected to report third-quarter earnings this week. Just under 20% of S&P 500 companies already published third-quarter results last week, and almost 80% of companies exceeded Wall Street expectations. However, analysts noted that the extreme increases are due to significantly lowered expectations in recent months; Because investment markets expect so little, it’s challenging for companies to fail, as CFRA chief investment strategist Sam Stovall notes, “it’s rare for someone to be injured by falling out of a basement window.”
Dow Jones News
On Monday, most of the securities listed on the Dow fall in value, and all but five of the Dow stocks are in red today. Boeing ( BA ) rose more than 3% to $160 per share ahead of the aerospace company’s earnings release scheduled for Wednesday, October 23. On the other hand, American Express (AXP), Home Depot (HD) and Travelers Companies (TRV) lead the loser, with each falling above 2%. AXP fell 2.5% to $270 per share, HD lost 2.3% to below $405.50, and Travelers Companies fell 2.25% to below $260 per share.
Dow Jones Price Forecast
Dow Jones gives mixed signals on daily candlesticks. Price action continues to trend bullish as bidding momentum exceeds long-term moving averages. But technical indicators are going haywire after months of flashing warning signs of overbought conditions.
The Dow retreated from its recent record high of 43,200 set last Friday, retesting below 43,000 and losing more than 300 points. Despite the pullback, prices remain firmly elevated, with the 50-day exponential moving average (EMA) well below the short-term price action at 41,740.
The moving average convergence-divergence (MACD) is currently above the zero line, which is a bullish signal, but the histogram shows decreasing momentum. The swift MACD line is now close to crossing below the slower signal line, signaling that bearish momentum may soon take over. This could indicate a short-term correction, especially if sellers manage to push the price below the 42,000 level.
Nevertheless, the MACD remains in positive territory and has yet to see a decisive crossover, indicating that the bulls still maintain some control. However, investors should closely monitor this indicator for additional confirmation of a possible reversal of the downward trend.
