Dow Jones
The Dow Jones declined slightly in the futures market, ending a four-day rally that has taken it to the highest level since March. The index reacted to news that some airlines were starting to consider resuming flights and that the ECB was adding more funds to its quantitative easing program.
The Dow Jones pared some of its earlier losses and briefly turned negative after the European Central Bank (ECB) delivered its interest rate decision. The bank left interest rates unchanged as was widely expected. Unlike in its meeting in May, the bank announced that it was expanding its quantitative easing (christened as pandemic emergency purchase program) to boost the regions’ growth. The bank will now purchase assets worth more than 1.35 trillion euros.
The decisions by the European Central Bank affects the Dow Jones because of the size of the companies. Most firms in the index make a significant amount of money in Europe. The new funding will be in addition to the $820 billion fiscal stimulus announced by the European Commission.
Airlines have been the most hurt companies by the coronavirus pandemic. Indeed, shares of companies like American, United, and Delta have lost more than 40% of their value this year. Now, there are signs that some of these companies will recover as they start operating. According to CNBC, American Airlines said that it will fly 55% of its domestic schedule in July.
This will be a dramatic increase from May, when it was flying about 20%. Indeed, the company has been seeing more customers. For example, it had more than 32,000 customers per day in April. In the final week of May, the customers rose to more than 110,000.
American is not the only airline boosting flights. In a report by OAG, airlines like United, Delta, and Southwest have boosted their bookings by 27% this month.
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On the daily chart, the Dow Jones is trading below the 50-day and 100-day exponential moving averages. It is also between the 61.8% and 78.2% Fibonacci retracement level. This means that the overall trend of the index is bullish and will remain like this so long as it remains above the 61.8% retracement of $25,300.