Dow Jones Index: Dow Futures Tank Amid Middle East Escalation

Summary:
• Dow futures opened lower on Monday due to a major escalation in the Middle East. The Dow Jones Index recovered at the end of last week.

Dow Jones Index currently sit 490 points above last week’s low as the Walls Street tries to recover from an intense sell-off. The Nasdaq 100 and S&P 500 also showed a similar trend by closing last week in the green. The recovery in the indices comes after positive job growth was reported by the US last week.

Dow Jones futures opened 123 points lower on Monday due to the escalating conflict in the Middle East. Side by side, Oil prices also surged by 3% as Israel declared war against Hamas. Goldman Sachs has also warned that Iran might face sanctions, which can lead to less production of oil and a notable rise in oil prices in the coming weeks.

US Stock Market Recovers After Positive Job Data

There is a glimmer of hope for the investors as US stock markets attempt to break their downwtrend. This hope comes after the US reported a surprising 98% increase in payroll growth for September. However, the wage growth percentage remained somewhat cooler, and a slight increase in unemployment was also reported.

This week, the Labor Department is expected to release the September CPI report, which will cause volatility in the US equities. The markets expect the year-on-year inflation rate to rise to 3.6% for September, as compared to 3.7% in August. This will keep the Dow futures in check for the rest of the week.

Dow Futures Forecast

Dow Jones Industrial Average has bounced 0.87% from its weekly lows. The immediate bullish target is the 200 MA, which currently lies 1.2% above the current levels. A deeper analysis of the chart reveals that the benchmark index has been in a downtrend since a rejection from the 35,300 points level in September.

After a breakdown below the 200 MA in September, Dow Jones Index forecast has flipped bearish for me. The index may now struggle to break above the key moving average, which lies at 33,943 points. The outlook on Dow futures will reman bearish until a reclaim of the 200 MA. In this bearish scenario, a retest of the 32,619 point level is still on the cards which was the May low.

I’ll keep sharing my real-time outlook on DJI vai Twitter, where you’re welcome to follow me.

Dow Jones Index Technical Analysis