Dow Jones futures slip 0.05% to around 49,560 during Thursday’s European session ahead of the US regular opening as investors rotated out of technology and into more reasonably valued sectors. The Dow Jones index gained 0.67% on Wednesday’s regular hours.
However, S&P 500 and Nasdaq 100 futures rise 0.14% and 0.37%, respectively, to near 6,910 and 25,090, as dip buyers emerged following two days of heavy selling in tech shares and investors assessed fresh earnings. In Wednesday’s cash session, the S&P 500 and Nasdaq Composite declined 0.51% and 1.51%, weighed down by software stocks amid concerns that AI could disrupt existing business models.
During extended hours, Alphabet fell 0.41% after signaling a sharp rise in AI spending this year, while the outlook lifted AI-related stocks such as Nvidia, up 1.9%, and Broadcom, which jumped 6.5%.
US stocks came under pressure amid hawkish Federal Reserve (Fed) signals and shifting geopolitical sentiment. Fed Governor Lisa Cook said she would not support further rate cuts without clearer evidence that inflation is easing, highlighting concerns over stalled disinflation rather than labor market weakness. Investors also assessed the implications of Kevin Warsh’s nomination as Fed chair, noting his preference for a smaller balance sheet and a less aggressive approach to easing.
Market sentiment briefly turned cautious after media reports suggested US–Iran talks could collapse, but officials from both sides later confirmed discussions would proceed as scheduled, despite an unresolved agenda.
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction 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. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the 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 buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
Source: https://www.fxstreet.com/news/dow-jones-futures-fall-due-to-renewed-selling-in-tech-202602050917
