Dow Jones Future Looks Solid Ahead of US NFP Data

Dow Jones Future Looks Solid Ahead of US NFP Data

The Dow Jones futures are trading higher today as investors are set to build on their previous gains. Traders also rewarded the American Airlines stock, AAL, yesterday for bringing life back to some level of normality after coronavirus.

The American Airlines stock went through the roof yesterday and scored gains of 41%. Overall, the Dow is still largely immune to the scenes of riots, looting, and civil protests taking place over the death of George Floyd in the U.S. 

Donald Trump still hasn’t done much to unite the nation by addressing the root cause of the on-going protests. However, traders are more focused on the U.S. jobs market as it is the health of the jobs market that is likely to determine the future course of monetary and fiscal policy.

The U.S. Non-Farm-payroll data is due later today, and it is likely to bring higher volatility for the U.S. stock market and gold. The unemployment rate in the U.S. is expected to rise to 19%, and this is going to keep the door wide open for another round of stimulus checks for Americans. 

Dow Jones Futures Today

The Dow Jones futures are marching higher today with a gain of well over 200 points while the dollar index continues its slide for a third consecutive week. 

The Dow chart below shows that the upward momentum is strongly intact for the Dow Jones industrial average, as it is trading above the 200-day simple moving average on a daily chart for the first time since September last year. If the index remains above this moving average, it is highly likely that the Dow index may touch its all-time high very soon while concerns continue to linger in the background about overvaluation. 

Stock Market Rally

The NASDAQ, the more tech-savvy index, took the biggest beating yesterday as compared to the other two major indices, the S&P500 and Dow Jones industrial average. The Nasdaq closed with a loss of 0.77%. Wall Street showed no love for the S&P500 stocks either, which recorded a decline of 0.34%. The Dow index was the only index that recovered all of its losses and closed in positive territory with a minor gain of 0.05%

Bulls may not want to lose their hopes about NASDAQ stocks because coronavirus has changed the culture and behavior among nations and employers and are likely to increase their investments in tech. Moreover, the NASDAQ index is still trading close to its all-time high and can easily breach this ceiling again with a small tailwind. 

Trump News: Buffalo Police and Civil Unrest 

In Trump news, the U.S. president, Donald Trump, continued to talk about “Law and order” and “Make America Great Again” while the riots, looting, and civil unrest continued in the U.S. due to the death of a black man, George Floyd in police custody. Buffalo police clashed with protestors, and two members of the Buffalo police force were suspended after knocking a 70-year-old man.

Following the memorial service of George Floyd, protests took place on the streets of New York City, with thousands of Americans marching across the Brooklyn Bridge to Manhattan. 

Despite the chaos, stock futures are looking solid as investors believe that the on-going civil unrest may die out given the fact that the memorial service was the peak of this event. 

US NFP Report 

The mother of all economic data is here today. Yes, it is the US Non-Farm-Payroll report. The US NFP data is not the most leading indicator, but this number is highly watched by the Federal Reserve because it provides a more accurate picture of the U.S. labor market.

The U.S. non-farm payroll release is at 13:30 London time today, and the forecast is for 7750K against the previous number of 20537K. It is the U.S. unemployment rate that is going to create more fear among investors as it is expected to shoot up to 19.4% in the U.S. when this reading was 14.7% last month.

At 19%, the number is highly likely to put more pressure on the Federal Reserve, and on Donald Trump to do more for the economy. A number this high is also likely to increase the odds of another round of IRS stimulus checks for Americans because the lawmakers will have no other choice but to help the nation. 

In terms of trading, the NFP release affects currencies, gold, bonds, and stocks. A poor reading is likely to push the gold price higher, and the dollar index could feel more pain because this will increase the speculations around the U.S. interest moving below zero. Trump has talked about moving the interest rates in the U.S. below zero, and with unemployment as high as 19%, this gives him more ammunition to fight for his case. 

Tesla Stock 

Tesla stock is up over 106% year-to-date, but it fell yesterday by 2.10%. Tesla’s stock price fell to $864 from $882 from its previous close, and trading volume was 26 percent below the 20-day average. The one-month implied volatility was 58 percent, and 13% of the shares traded were at the ask price, and 18 percent were at the bid price. 

Tesla CEO Elon Musk blasted Amazon.com yesterday and asked for the breakup of the company yesterday. Amazon, helmed by Jeff Bezos, was criticized by Elon Musk after Kindle Direct Publishing, Amazon’s self-publishing platform, rejected the submission of Elon’s book called “Unreported Truths about Covid-19 and Lockdowns”. The battle broke out between the two entrepreneurs on their twitter. 

The company’s stock is likely to be volatile again today. In terms of technical analysis, the stock remains in a strong uptrend, and a possible buy opportunity could be near $700.