Dow Jones Futures Drop Due to Important Economic Data.
Introduction
In a whirlwind of economic data releases, the Dow Jones futures experienced a slight decline, while other indices managed to rise on Tuesday morning. The market was influenced by various factors, including new house sales figures and consumer confidence data. Furthermore, Walgreens (WBA) faced a decline in its profits, which impacted its stock value.
The Impact of Economic Data
Rise in Durable Goods Orders
May witnessed a surprising 1.7% increase in durable goods orders, following a 1.1% rise in April. Although the 1% decline in May had been predicted, the unexpected increase raises interesting questions about market trends and consumer behavior.
Home Price Indices and New House Sales
At 9 a.m., both the Case-Shiller and FHFA home price indices are scheduled to be released. These indices provide insights into the housing market, influencing investor sentiment and consumer spending. Additionally, at 10 a.m., new house sales figures will be unveiled, shedding light on the state of the real estate sector.
Modest Improvement in Consumer Confidence
June is anticipated to witness a modest improvement in consumer confidence, with a projected reading of 103.7 compared to May’s 102.3. This increase suggests that consumers may be more optimistic about the overall economic outlook, potentially driving market activity.
Walgreens’ Performance
Premarket trading on Tuesday revealed a 7% decline in Walgreens shares. The company fell short of earnings projections and lowered its full-year guidance, attributing the disappointing results to “challenging consumer and macroeconomic conditions.” This downward trend in Walgreens’ stock value has drawn attention from investors and analysts alike.
Tech Giants on the Rise
Before the commencement of today’s stock market, tech giants Apple (AAPL) and Microsoft (MSFT) experienced a slight uptick in their stock prices. These industry powerhouses often have a significant influence on the overall market sentiment and direction.
Dow Jones Technical Analysis
Daily Chart Overview
Taking a closer look at the daily chart for the Dow Jones, we observe the following:
- The Dow Jones is currently trading within a downward channel, indicating a bearish trend in the market.
- The index is positioned below both the 20-day and 50-day Simple Moving Averages (SMA), suggesting a potential continuation of the downward trajectory.
- The Relative Strength Index (RSI) is within the buying zone, signaling a bullish sentiment. However, the Stochastic indicator indicates a downward trend.
- Immediate resistance is observed at 34085.01, while the immediate support level is 33884.38.
How to Trade Dow Jones This Week
Following a significant upward movement, the Dow Jones encountered a reversal and started trading lower. The index is currently approaching a critical support level, and if breached, further declines could be expected.
Trade Suggestion
For traders considering Dow Jones, a potential trade suggestion is as follows:
- Sell at 33959.48
- Target at 33733.34
- Stop Loss (SL) at 34160.15
Frequently Asked Questions (FAQs)
What caused the decline in the Dow Jones futures?
Answer: The decline in Dow Jones futures can be attributed to the release of important economic data, including new house sales figures and consumer confidence data. Additionally, Walgreens’ disappointing financial results played a role in the market’s reaction.
FAQ 2: What factors influence consumer confidence?
Answer: Consumer confidence is influenced by various factors, such as job market conditions, wage growth, inflation rates, and overall economic stability. These factors shape consumers’ perceptions and willingness to spend.
3: How do durable goods orders impact the market?
Answer: Durable goods orders reflect the demand for long-lasting consumer products, such as appliances, vehicles, and electronics. An increase in durable goods orders suggests potential economic growth, while a decline may indicate a slowdown in consumer spending.
4: What role do tech giants like Apple and Microsoft play in the market?
Answer: Tech giants, such as Apple and Microsoft, hold significant market capitalization and influence investor sentiment. Their performance often impacts the overall direction of the market, particularly within the technology sector.
5: How does the Dow Jones technical analysis help traders?
Answer: Dow Jones technical analysis provides traders with insights into the market’s trend, support and resistance levels, and potential entry or exit points for trades. Traders use technical indicators to make informed decisions based on price patterns and market behavior.