- The Dow Jones Index slipped as concerns about the US-Iran ceasefire rose.
- The Fear and Greed Index remains in the fear zone.
- The US earnings season will start on Tuesday next week.
The Dow Jones Index futures dropped by over 200 points on Thursday morning, erasing some of the gains made on Wednesday following the new ceasefire between the US and Iran. It dropped to $47,700 as doubts on the fragility of the ceasefire rose.
Fear and Greed Index Still in Red as Ceasefire Risks Remain
The Dow Jones Index futures dropped as concerns about the US-Iran ceasefire rose. As a result, the Fear and Greed Index dropped to the fear zone of 32, with key gauges like the market momentum, stock price strength, and put and call options remaining in the extreme fear zone.
Only the safe-haven demand moved into the greed zone, while the junk-bond demand and market volatility remained in the neutral zone. Investors are mostly fearful that the ceasefire between the US and Iran may not last for two weeks.
The main concern is that Israel has continued to bomb Lebanon, which Iran sees as a red line. Iranians have warned that they might restart their attacks against Israel and close the Strait of Hormuz if this bombing continues.
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These concerns explain why crude oil prices have continued to rise, with the West Texas Intermediate (WTI) and Brent rising to $99 and $98, respectively. Analysts caution that the resumption of the war will push these prices higher in the near term.
The next main catalyst for the Dow Jones Index is the upcoming US consumer inflation report on Friday. Economists expect the data to show that the headline Consumer Price Index rose to 3.4%, its highest level in months.
The index will also react to the earnings season, which will start next week. JPMorgan, Johnson &Johnson, Wells Fargo, Citigroup, and Citigroup will release their numbers on Tuesday next week, while Bank of America, Morgan Stanley, and ASML will release a day later.
Wall Street analysts are optimistic that the earnings season will be successful, with the average estimate that companies in the S&P 500 Index will report earnings growth of over 13%.
Dow Jones Index Technical Analysis
The daily chart shows that the Dow Jones Industrial Average bottomed at $45,000 on March 27 and then bounced to a high of $48,000 on Wednesday. This rebound occurred after the index formed a large falling wedge, which often leads to a strong bullish breakout.
It remains above the 50-day moving average, while the Relative Strength Index (RSI) has jumped and crossed the neutral point.
Therefore, the index will likely continue rising and possibly cross the all-time high later this year.
This is what has happened whenever major crises have happened, including the COVID-19 pandemic, the start of the Russia-Ukraine war, and Donald Trump’s tariffs. Stocks often drop sharply, then resume their uptrend as market participants embrace a new normal.
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