CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Dow Jones Forecast: DJIA Hits 40K – Will We See a Bounce?

Article By: ,  Head of Market Research
July 24, 2024 8:26 PM

DJIA Key Points

  • All the major indices are trading lower, led by a -3% decline in the tech-heavy Nasdaq 100
  • Yield curve “uninversions” have historically been a harbinger of a potential recession, and we’re closer to that signal than at any point in the last 2 years.
  • DJIA has fallen back to retest the psychologically-significant $40K level, which could now provide support for the index moving forward.

Make no bones about it: Today has been a rough day for the US stock market.

All the major indices are trading lower, led by a -3% decline in the tech-heavy Nasdaq 100 in the wake of disappointing earnings from Tesla and (to a lesser extent) Alphabet. While soft earnings from Two of the so-called “Magnificent Seven” stocks is the proximate cause for the big selloff, we also saw a worse-than-expected 49.5 reading in the S&P Flash Manufacturing PMI survey out of the US, the lowest reading this year.

The steepening of the 10yr-2yr yield spread to its tightest level in over 2 years (14bps) is also playing a role in spooking investors, as yield curve “uninversions” have historically been a harbinger of a potential recession. Time will tell whether this cocktail of bearish indicators continues to weigh on indices, but as it stands, bears are holding the upper hand at the moment.

Dow Jones Industrial Average Technical Analysis – DJIA Daily Chart

Source: TradingView, StoneX

From a technical perspective, the DJIA has fallen back to retest the psychologically-significant $40K level as we go to press. This level, which served as key resistance in April and May, could now provide support for the index moving forward.

If we fail to see a bounce here, a deeper drop toward the 100-day MA and the rising trend line connecting the April, May, and June lows near $39K could be the next stop for the index.

-- Written by Matt Weller, Global Head of Research

Check out Matt’s Daily Market Update videos on YouTube and be sure to follow Matt on Twitter: @MWellerFX

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024