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Dow Jones futures trade higher despite persistent concerns over Trump's tariffs

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Dow Jones futures trade higher despite persistent concerns over Trump's tariffs

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New update 2025.07.21 19:32
Dow Jones futures trade higher despite persistent concerns over Trump's tariffs

update 2025.07.21 19:32

  • Dow Jones futures gains even as concerns over Trump's tariffs continue to persist.
  • Investors struggle to scrutinize the absolute impact of Trump's tariffs on the economy.
  • Investors await quarterly results of Tesla and Aphabet this week.

Dow Jones futures trade higher during the European trading session on Monday, signalling a positive opening for United States (US) equities after the weekend. US indices have broadly remained in a limited range from last three weeks as investors struggle to gauge the absolute impact of sectoral and reciprocal tariffs announced by President Donald Trump.

At the time of writing, Dow Jones futures gain over 0.2% higher around 44,440, S&P 500 futures rise to near 6,316 after adding 16 points.

So fat, US President Trump has imposed sectoral tariffs on imports of various products such as automobiles and a few base metals, and reciprocal levies on 22 nations, notably Japan, South Korea, Canada, Mexico, and the European Unions (EU). Still, a few of these nations are negotiation with White House officials to reach a deal before the August 1 deadline.

Washington has signed bilateral deals with a handful of nations such as the United Kingdom (UK), Vietnam, Indonesia, and a limited pact with China.

Meanwhile, uncertainty surrounding trade talks between the US and the EU has increased as US President Trump has demanded a higher baseline tariff rate on imports from the trading bloc and has shown reluctancy to reduce 25% automobile levy.

This week, investors will pay close attention to quarterly results from auto-giant Tesla and tech-giant Alphabet, which are scheduled for Wednesday.

On the monetary policy front, traders pare Federal Reserve (Fed) dovish bets after the release of the United States (US) Consumer Price Index (CPI) data for June, which showed that prices of products that are largely imported have increased after the imposition of sectoral tariffs by President Donald Trump.

According to the CME FedWatch tool, the probability for the Fed to reduce interest rates in the September meeting has declined to 58.5% from almost 70% seen a month ago.

The scenario of the Fed adopting a restrictive monetary policy stance is unfavorable for US equities.

 

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.



Date

Created

 : 2025.07.21

Update

Last updated

 : 2025.07.21

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