Dow Jones Forecast:
Dow Jones Price Outlook: Boeing to Undermine Index Further, Support Eyed
The Dow Jones opened lower to start the week despite another unexpected announcement from the Federal Reserve in which they revealed opened-ended purchases of mortgage-backed securities and treasuries. The policy is intended to help smooth market functioning, but traders were seemingly unconvinced it was enough to completely ward off further losses.
Consequently, it seems equity traders will rely on coronavirus news for price influence. Encouragingly, Italy witnessed a decrease in hospitalized patients in Lombardy and a slowing trend of new coronavirus cases in Milan. Together, the developments may have contributed to the intraday bump the Dow Jones enjoyed.
Dow Jones Price Chart: Weekly Time Frame (January 2014 – March 2020)
Nevertheless, the Industrial Average remains threatened – even when compared to its Nasdaq 100 and S&P 500 counterparts. Amid the ongoing containment measures, Boeing announced it would close its Puget Sound factories for at least two weeks which saw BA shares halted in mid-day trading. Despite the pause in trading, the news is yet another negative development for the airliner manufacturer, adding to a string of issues that has seen it fall down the order of Dow components.
The precipitous decline in Boeing’s stock price has – among other factors – seen the Industrial Average fall farther than the S&P 500 and even the tech-heavy Nasdaq 100 during the current stock market crash. In turn, the DJIA is well beneath the levels that are currently aiding the other two indices and has left it grasping for subsequent support around 18,000. The area coincides with various highs in 2015 but may only offer a modicum of support given the pace of declines.
Therefore, secondary and tertiary support around 16,000 and 15,300 may come into play should declines continue. While I noted a modest decline in the VIX last Friday, Monday’s trading has seen volatility revive and threaten to deliver the drastic price swings stocks have seen over the last month. To be sure, equity declines may persist until volatility cools and the pace of gains and losses slows. In the meantime, keep an eye on volatility and sign up for my webinar below for an extended analysis of equity markets in the week ahead.
( 15:03 GMT )
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Weekly Stock Market Outlook
–Written by Peter Hanks, Junior Analyst for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX