CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

Dow Jones outlook: further losses to index expected at Monday’s open

Dow Jones investors are steeling themselves for another week of earnings reports, with a renewed US-China trade dispute also thrown into the mix.

The Dow Jones is projected to open trading on Monday by continuing the downward trend from the end of last week, when the index shed 622 points on a particularly brutal Friday. The outcome of weekend trading with IG was an approximate 0.5% slide from the Friday close of 23,723.69, with the Dow Jones loitering around the 23,600.00 mark as of 07:35 GMT on Monday.

A tough end to the week didn't detract from the Dow Jones' overall strong performance in April, with the index surging by 11.1% throughout the month to deliver its best April showing since 1938. Yet, that sharp Friday fall hints at a turning of the tide, with stocks expected to pull back in May as the long-term economic consequences of the coronavirus pandemic become increasingly clear.

Uncertainty from Apple's earnings and US-China trade conflict sent the Dow Jones downwards

Apple Inc.'s quarterly news and President Donald Trump's threat to introduce import tariffs on China were among the highlights from last week's trading, although lowlights may come with a more apposite description.

Apple, one of the most influential Dow Jones components with an index weighting of 8.01%, announced that a rise in sales couldn't save the quarter from a decline in profits. The tech giant also opted against providing investors with a clear outlook for the current quarter, with the general sentiment very much 'no news is bad news' as Apple stocks dropped by 1.61%.

In a throwback to pre-pandemic trading news, the US-China trade dispute took centre stage at the back-end of last week. President Trump indicated that he might impose new tariffs on China as reparations for a perceived mishandling of the coronavirus pandemic.

This open threat played a significant role in the Dow Jones' downward shift at the end of last week, and any doubling down on that threat by members of the US government next week should provoke similar market movement.

With domestic unemployment figures skyrocketing, the Dow Jones' movement this week will reveal the extent of investors' confidence in the US economy to ride out a trade war escalation during a global pandemic. Many of the companies represented on the Dow Jones would be keenly affected by further disruption to global trade; an inevitable effect of the tariff threat to China.

Earnings reports from Disney and Raytheon among the key flashpoints for the Dow Jones in the week ahead

Just like last week, the Dow Jones will be guided by a batch of earnings reports released by major companies in the next few days of trading.

The Walt Disney Company will announce their Q2 earnings on Tuesday, with earnings per share expected to be around half of the $1.61 figure from this time last year. This report will reveal the extent that the Disney+ streaming service has mitigated the loss of cinema and theme park revenues during the pandemic.

Raytheon Technologies will declare earnings for the previous quarter this Thursday, with investors curious about how commercial aviation losses will stack up against the rest of the conglomerate's recent business.

Outside of Dow components, earnings reports are also expected from General Motors, CVS Health, and PayPal this week, revealing the impact of a contracting economy on the automotive, pharmaceutical, and payments industries. This may give new insight into what markets can expect when this current financial quarter concludes.

The health of the domestic economy will become clearer at the end of this week's trading, with the April employment report expected to paint a bleak picture. This report arrives on Friday, with early projections anticipating the confirmation of around 22 million April job losses and an overall unemployment rate of 16%.

That report will loom over the Dow Jones throughout the week of trading, though any news of a relaxation in social distancing measures or further progress towards a coronavirus vaccine, may soften the blow.

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This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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