Dow Jones Index Upside Persists As Earnings Provide Propulsion

Summary:
• The Dow Jones Index rose on Thursday as investors remained upbeat on the market's performance despite the Fed retaining high interest rates.

The Dow Jones Index rose by 0.85% or 322 points on Thursday to register the second successive daily win. That is a welcome move for the market after Tuesday’s massive drop of nearly 1.5%. The index has a new impetus driven by forecast-beating results as the earnings season gathers momentum.

UnitedHealth, the Dow Jones’ largest stock by weight, edged up by 1.83%, signaling that investors could have moved past recent reports of a data breach. However, Boeing was the biggest gainer of the day, rising by 4.3%  to continue with a week-long uptrend. Amazon was the second-largest gainer, rising by 3.2%, while Nike closed the top three gainers’ list after rising by 2.2%.

Apple reported revenue of $90.8 billion, dropping by 4% year-over-year, but beating analysts’ forecast of $90 billion. This resulted in EPS of $1.53, versus analysts’ estimate of $1.50. However, the world’s largest company by market capitalization recorded a 10% drop in sales, with iPhone sales coming in at $45.96 billion versus the forecast figure of $46 billion. A decline in iPhone sales is an ongoing concern that will likely affect AAPL in the mid-term. Apple’s share price closed trading up by 2.2% on Thursday.

Another tech giant, Microsoft, saw its share price record a daily gain of 0.73% on Thursday, following up Wednesday’s larger gain of 1.44%. Microsoft also beat earnings expectations, and buyers are likely to continue leading the way after the company reported upbeat forecasts for the next quarter.

Meanwhile, Johnson and Johnson shed 0.8%, with the company’s proposed $6.5 billion talc lawsuit settlement took its toll. The settlement seeks to help the company move past litigation around its talc powder, which some claimants say caused ovarian cancer. Looking ahead, investors will trade with the Fed’s higher-for-longer interest rates in mind, following Thursday’s retention of the 5.5% rate.

Technical analysis

The momentum on the DJI signals a likely continuation of the upside. However, that will be subject to the buyers keeping the index above the 38 195 pivot point. Doing so will favour them to go above the resistance at 38358 in extension, and potentially test 38507. Alternatively, if the index moves under 38195, it could favour the sellers to be in control. That will likely see them build the momentum to breach the support at 38009, thus invalidating the upside view. Furthermore, an extension of the sellers’ control could move the index lower to test 37882.