Dow Jones futures rise ahead of US PCE data
- Dow Jones futures gain, but Tech drags S&P 500 and Nasdaq down following Alphabet’s earnings drop.
- In after-hours trading, Alphabet plunges 10% over AI spending concerns, while Microsoft gains 4% on strong Azure cloud growth.
- Fed holds interest rates steady at 3.75%–4.00% amid elevated inflation, with two officials dissenting.
US stock futures showed mixed results during European trading hours on Thursday. Dow Jones futures gained 0.37% to trade near 52,890, while S&P 500 futures fell 0.38% to around 7,750 and Nasdaq 100 futures lost 1.2% to near 29,620. Traders are now turning their attention to the upcoming US Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation metric, for clearer signals on the future trajectory of monetary policy.
The market divergence was largely driven by major tech earnings. Alphabet plunged around 10% in after-hours trading after reporting weaker-than-expected third-quarter revenue across most core businesses, reigniting concerns over the high cost of artificial intelligence investments. Conversely, Microsoft rose nearly 4% following better-than-expected quarterly results boosted by strong growth in its Azure cloud infrastructure.
Meanwhile, the Federal Reserve kept interest rates unchanged at 3.75%–4.00% as widely expected, while offering limited clarity on its next policy direction. In its official statement, the central bank noted that economic activity continues to expand, supported by resilient domestic spending, robust capital investment, and strong productivity growth. On employment, the Fed observed that job gains have matched workforce expansion while the unemployment rate has remained relatively stable.
Acknowledging that price pressures remain elevated, the Fed chose to pause further rate hikes to gather additional data before deciding its next monetary stance. The decision was not unanimous, as Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented in favor of an immediate rate increase.
Following the meeting, Fed Chair Kevin Warsh reaffirmed the committee's commitment to returning inflation to its 2% target, emphasizing the underlying strength of the economy. He also noted that the Fed plans to hold eight meetings next year, including one without a formal vote, and anticipates six policy-setting meetings in 2028.
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.
Nothing in this material constitutes investment advice, personal recommendation, investment research, an offer, or a solicitation to buy or sell any financial instrument. The content has been prepared without consideration of your individual investment objectives, financial situation, or needs, and should not be treated as such.
Past performance is not a reliable indicator of future performance and/or results. Forward-looking scenarios or forecasts are not a guarantee of future performance. Actual results may differ materially from those anticipated.
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