- Summary:
- The Dow Jones index declined today after a report by Bank of America showed that most fund managers believe that this is a bear market rally
The Dow Jones eased in the premarket today as investors reacted to a new survey by Bank of America. The index also eased as the market waited for a testimony by Jerome Powell.
Bank of America survey warning
The Dow Jones reacted to a survey by Bank of America. The survey showed that most fund managers were sceptic about the current rally in stocks. Of the managers surveyed, 68% of them said that the current rally in stocks appeared like a bear-market rally. This is a rally which happens for a short period before it continues the downward trend. A quarter of those surveyed believe that the current rally will be sustained.
At the same time, ten per cent of the participants in the survey expect the economy to have a V-shaped recovery. This is a situation where the economy falls deeply and immediately bounces back. Most of the participants (about 75% of them) believe that the US economy will have a U-shaped recovery. This is a recovery that takes a longer time.
While most fund managers believe this is bear market rally, most of them remain invested in equities. The percentage of those in equities rose by 10 per cent to 16 per cent. What’s more? These investors believe that US stocks will rally in the long term while those from Europe will fall.
Walmart the biggest mover in Dow Jones
Walmart was among the biggest movers in the Dow Jones after the retailer announced positive earnings in the first quarter. The company made more than $134 billion in revenue and a net income of almost $4 billion. The revenue was above the $123 billion that analysts were hoping for. The biggest news was that the company was shutting down Jet.com, the e-commerce platform it bought for $3 billion a few years ago. Also, costs rose as the company increased its deliveries. As a result, it removed its forward guidance.
Other big movers in the Dow Jones are Verizon, whose stock fell by more than 1.35%, Procter & Gamble, whose shares fell by 1.05%, and Home Depot, which reported a weak quarter. The Dow Jones Index also reacted to the weak housing starts data.
Download our Q2 Market Global Market Outlook
Dow Jones technical outlook
The Dow Jones is trading at $24,561. On the daily chart, the price is above the 50% Fibonacci retracement level and slightly above the 50-day EMA. It is also a few inches below the 100-day EMA and the highest point since the March meltdown. A move above this resistance level of 24915 will validate this bull trend and it will mean thar bulls are in total control. This will see them attempt to test the 61.8% retracement at $25260.
On the other hand, if the Dow Jones moves below $22800, it will invalidate this thesis. This price is along the lowest level on March 14.