Dow Jones Futures Tumble After U.S. Debt Downgrade; AMD Surges on Earnings.

Introduction

In the wake of Fitch’s downgrade of the United States debt rating, the Dow Jones futures took a hit early on Wednesday. Meanwhile, the morning brought with it important data on oil inventories, and ADP’s monthly payrolls report surpassed expectations. Additionally, Advanced Micro Devices (AMD) witnessed an impressive surge in its earnings, contributing to positive sentiment in the market.

U.S. Debt Downgrade by Fitch

Late on Tuesday, Fitch downgraded the United States’ long-term foreign-currency issuer default rating from AAA to AA+. This move came as a result of the company’s prediction of fiscal deterioration over the next three years. The downgrade sent shockwaves through the market, affecting investor confidence and leading to bearish sentiments in the Dow Jones futures.

ADP’s National Employment Report

Wednesday saw the publication of ADP’s National Employment Report, revealing significant employment numbers. Private payrolls for July reached 324,000, which, though lower than June’s figure of 497,000, exceeded the projected 185,000. This data provided some relief and stability to the market amidst the ongoing concerns over the debt downgrade.

Labor Department’s Friday Payrolls Data

The ADP employment report preceded the Labor Department’s Friday, July payrolls data. Economists predicted a gain of 190,000 jobs in July, slightly lower than June’s numbers, with a minor increase in the hourly average income. The unemployment rate, however, is expected to remain steady at 3.6%.

Market Pre-Opening Trends

In premarket trading, AMD shares rose by an impressive 2.3%, reflecting the company’s strong earnings. Conversely, Dynatrace experienced a dip of about 7%. Notably, Ferrari shares also fell by 1.5%, while ELF stock soared by a significant 17%. Furthermore, Generac faced an 11.5% decline, whereas Micro Strategy stock experienced a modest increase.

Dow Jones Technical Analysis Daily Chart

• Dow Jones is currently trading in an upward channel.
• Dow Jones is currently trading below the 5&20 SMA (Simple Moving Average).
• RSI (Relative Strength Index) suggests a buying zone, indicating bullishness.
• The stochastic indicator suggests a neutral trend.
• The immediate resistance level at 35624.06, and the immediate support level at 35444.99.

How to Trade Dow Jones This Week

The Dow Jones has been experiencing swift growth, setting new record highs. However, it currently faces an important resistance level. Breaking this level could potentially lead to further upside and bullish momentum. Traders should closely monitor the market conditions and consider the following trade suggestion:

• Trade Suggestion:
  • Entry at 35741.20
  • Target at 35988.21
  • Stop Loss at 35579.52

Conclusion

The recent U.S. debt downgrade by Fitch had a significant impact on the market, leading to a dip in the Dow Jones futures. However, positive economic indicators, such as ADP’s National Employment Report, provided some relief to investors. Amidst the market uncertainties, AMD’s strong earnings boosted market sentiment. Traders should carefully observe the technical analysis and market trends to make informed decisions for profitable trading.