Created
: 2025.07.22
2025.07.22 19:04
Dow Jones futures are trading 0.01% higher at the time of writing, the S&P Index futures trade 0.10% lower, and the Nasdaq Index dips 0.25%.
Market sentiment remains subdued on Tuesday, which is weighing on demand for equities. Concerns about tariffs have returned to the forefront, as the negotiations with the Eurozone and Japan stalled, and US Secretary Scott Bessent affirmed that they are "not going to rush for the sake of doing deals".
In the absence of key macroeconomic data, these comments, coupled with the lack of advances with the August 1 deadline around the corner, are increasing investors' concerns about the potential impact of higher importing costs on US economic growth and inflation.
Eurozone negotiators have suggested that the growing demands from the US side are hindering a positive outcome, and the EU is preparing a retaliation that might include "anti-coercion" measures affecting public tenders or digital services.
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In the calendar, the most relevant event will be Fed Chair Powell's speech in Washington later today. The Fed chief is unlikely to mention monetary policy as the bank is on a blackout period ahead of the July 29-30 meeting, but he might defend the independence of the central bank in the face of unprecedented pressure from the US president.
Also today, megacaps Amazon and Tesla will release their quarterly results, together with Verizon, Lockheed Martin, GE Aerospace, and Kimberly-Clark among others. These figures are likely to determine the market mood during the US session.
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.
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Created
: 2025.07.22
Last updated
: 2025.07.22
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