Dow Jones analysis - July 29
US stock indices have dropped after a positive open. But the path of least resistance remains to the upside ahead of key events this week including the FOMC policy decision on Wednesday and the US non-farm payrolls report on Friday.
The Dow Jones outperformed global indices with a 1.55% gain on Friday, positioning it well for the upcoming week. In contrast, the Nasdaq is expected to be more volatile, influenced by earnings reports from major tech firms like Meta, Microsoft, Amazon, and Apple.
Last week's gains for the Dow followed a volatile period marked by disappointing earnings from Tesla and Alphabet, which shifted investor focus to sectors benefitting from potential Federal Reserve rate cuts. The Fed's dovish stance could lift stock markets, while a hawkish approach might trigger selling, especially in growth stocks and small caps.
Technically, the Dow remains bullish, having recently rebounded above the key 40K level. The main support is at 40K, with interim support seen around the 40,260-40,440 range, which is where the index was testing at the time of writing.
Meanwhile, resistance above today’s earlier high of 40,822 comes in at 41,366, aligning with the 161.8% Fibonacci extension level of the drop from the May high.
By Fawad Razaqzada, market analyst at FOREX.com
The Dow Jones outperformed global indices with a 1.55% gain on Friday, positioning it well for the upcoming week. In contrast, the Nasdaq is expected to be more volatile, influenced by earnings reports from major tech firms like Meta, Microsoft, Amazon, and Apple.
Last week's gains for the Dow followed a volatile period marked by disappointing earnings from Tesla and Alphabet, which shifted investor focus to sectors benefitting from potential Federal Reserve rate cuts. The Fed's dovish stance could lift stock markets, while a hawkish approach might trigger selling, especially in growth stocks and small caps.
Technically, the Dow remains bullish, having recently rebounded above the key 40K level. The main support is at 40K, with interim support seen around the 40,260-40,440 range, which is where the index was testing at the time of writing.
Meanwhile, resistance above today’s earlier high of 40,822 comes in at 41,366, aligning with the 161.8% Fibonacci extension level of the drop from the May high.
By Fawad Razaqzada, market analyst at FOREX.com
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