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Dow Jones set to rebound following 1,861 point collapse on Thursday

Dow Jones futures suggest the market will open in the green on Friday, following yesterday's dramatic session which saw the key US benchmark crash 6.9%.

Dow Jones futures trade higher

US markets faced a brutal session on Thursday, with the Dow Jones, S&P 500 and Nasdaq Composite all finishing out the session significantly lower.

The Dow Jones Industrial Average was the worst performing of the three, dropping 6.90% or a staggering 1,861 points to finish the session at the 25,128 point level. The Nasdaq Composite shed 5.27%, while the S&P 500 plunged 5.89%.

Yesterday’s extreme volatility comes as the Federal Reserve noted that it expected the US economy to contract by 6.5% in 2020, before returning to growth in 2021. The US Fed expects to keep interest rates close to zero through to 2022.

‘The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term,’ the Fed said.

Concerns also remain that the United States is primed for a second wave coronavirus outbreak.

Equities fall, Boeing share price drops 16.42%

On a more granular level, no Dow constituents traded positively on Thursday, though Walmart, Procter & Gamble and Verizon saw the softest share price declines. On the other end of the spectrum, many Dow stocks faced significant selling pressure yesterday, with Boeing collapsing 16.42%, Dow dropping 9.91%, IBM lost 9.13% and Goldman Sachs was bid 9.08% lower.

Elsewhere and from a technical perspective, IG Senior Market Analyst, Joshua Mahony bluntly said:

‘The recent Dow rally is well and truly over, with the index breaking sharply lower for a third consecutive today. This marks the most severe decline in over a month.’

While Mr Mahony noted that ‘In time this is likely to bring a buying opportunity,’ he went on to stress that ‘for now we could see further downside following a trendline break.’

‘In terms of support, we remain some way from the 61.8% and 76.4% Fibonacci levels at 26,021 and 25,640.’

Irrespective of technical indicators, as of 11:29pm (EDT), Dow Jones futures are trading some 254 points or 1.01% higher, suggesting that the key US benchmark will open in positive territory on Friday, 12 June.

How to trade US stocks after hours with IG

Trading pre- and post-market enables you to take a position on key US shares – like Tesla, Apple, Amazon and Netflix – outside normal trading hours.

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This information has been prepared by IG, a trading name of IG Australia Pty Ltd. 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.

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