Dow Jones Industrial Average posts weekly loss on hawkish Fed outlook
The Dow fell for a fourth straight session this week and is on track to fall nearly 4.5% from its late March high near 40,000.
JPMorgan Chase led the declines after its quarterly earnings missed expectations.
News that China is asking tech companies to phase out foreign chips has dealt a heavy blow to chipmakers.
The Dow Jones Industrial Average (DJIA) opened lower on Friday, reversing Thursday's gains. Quarterly earnings from some of the largest U.S. banks failed to cheer investors, whose sentiment was already fragile as hopes for easier monetary policy from the Federal Reserve faded.
JPMorgan Chase & Co. (JPM) and Wells Fargo & Co. (WFC) reported first-quarter results that were weaker than expected, weighing on the financial sector. Large-cap stocks and chipmakers also were hurt by news that China has asked telecom companies to phase out foreign chips.
The Nasdaq led the declines on Friday, falling 1.75% to 16,154, the S&P 500 fell 1.57% to 5,117 and the Dow Jones fell 1.4% to 37,895 in afternoon trading.
Dow Jones News
All sectors on Wall Street fell on Friday. The materials sector fell 1.7%, the worst performer, followed by the technology sector, which fell 1.62%. Utilities and consumer staples sectors were the least affected by risk aversion, falling 0.57% and 0.74%, respectively.
On Friday, JP Morgan (JP Morgan) suffered the most with a 5.85% drop to $184.04, hurt by poor quarterly data, while Intel (INTC) fell 4.45% to $35.93, hurt by news of China's decision. On the positive side, Apple (AAPL) rose 0.39% to $175.78, followed by Travelers Inc. (TRV), which rose 0.32% to $221.09.
Dow Jones Technical Outlook
The Dow Jones Industrial Average is moving away from its all-time high set in March. A break below 38,560 has activated a bearish head and shoulders pattern that could signal a larger decline.
The next bearish targets are 38,000 and 37,750. The H&S pattern is measured against the mid-January low and the 38.6% Fibonacci retracement at 37,087. A bullish reaction above 38,540 could find more supply before 39,000 (order block).
Dow Jones Daily Chart
S&P 500 FAQs
The S&P 500 is a widely followed stock price index that measures the performance of 500 publicly traded companies and is considered a broad indicator of the U.S. stock market. Each company's impact on the index calculation is weighted based on market capitalization. Market capitalization is calculated by multiplying the number of publicly traded shares of a company by its share price. The S&P 500 has an impressive return - a $1.00 investment in 1970 would have returned nearly $192.00 by 2022. Since its inception in 1957, the average annual return has been 11.9%.
Companies are selected by committee, while some other indices are included based on established rules. However, they must meet certain eligibility criteria, the most important of which is market capitalization, which must be greater than or equal to $12.7 billion. Other criteria include liquidity, domicile, public float, industry, financial viability, length of time listed, and industry representativeness in the U.S. economy. The nine largest companies in the index account for 27.8% of the index's market capitalization.
There are many ways to trade the S&P 500. Most retail brokers and spread betting platforms allow traders to bet on price movements using contracts for difference (CFDs). In addition, traders can buy indices, mutual funds, and exchange-traded funds (ETFs) that track the price of the S&P 500. The most liquid ETF is State Street's SPY. The Chicago Mercantile Exchange (CME) offers futures contracts on the index, and the Chicago Board Options Exchange (CMOE) offers options as well as ETFs, inverse ETFs, and leveraged ETFs.
Many different factors influence the S&P 500, but the main factor is the overall performance of the companies in the index as reported in their quarterly and annual earnings reports. U.S. and global macroeconomic data also have an impact on investor sentiment, which can drive stock prices higher if investor sentiment is favorable. The interest rate level set by the Federal Reserve (Fed) also affects the S&P 500 because it affects the cost of credit, which many companies rely heavily on. Therefore, inflation and other indicators that influence the Fed's decisions are major drivers.
Source: https://www.fxstreet.com/news/dow-jones-industrial-average-dips-further-following-bank-earnings-data-202404121652