Investors have been reacting to the Middle East crisis by moving the Dow Jones Index sideways over the last few weeks. Blue-chip index which is a collection of some of America’s biggest companies ended the week last at 42,205. This was a few percentage points lower than this month’s peak of 43,120. The top drivers of this index for this week are listed below.
US, Israel and Iran’s War
This week, the Dow Jones will be primarily influenced by the continuing crisis between Iran and Israel. On Saturday night, the United States carried out a massive bombing campaign against Iran’s nuclear facilities.
In an effort to stop Iran’s nuclear programme, it attacked Fordow, Natanz and Esfahan. Trump warned in a Truth Social posting that he would take more action against Iran if they retaliated.
What happens next between these three countries is not clear. It is certain that there will be some market volatility Monday, and the West Texas Intermediate crude oil and Brent crude price could surge.
The US will continue to experience high inflation in the months ahead due to higher oil prices. The Federal Reserve will find it harder to reduce interest rates if inflation is higher than Donald Trump had requested.
Earnings of top corporations
This week, the Dow Jones will also be impacted by key earnings reports from important companies.
FedEx is the first company that should be watched, as it’s one of the biggest players in the industry. FedEx, UPS and similar companies are seen by many as indicators of American and global economic health because of their volume of deliveries. FedEx will announce its earnings three days following the death of its founder.
Nike, another major Dow Jones Index player will publish their financials on Thursday. The numbers are going to give us more information about the business of Nike and whether its turnaround is working.
Carnival, Micron FactSet and Paychex are the other companies which may have a significant impact on Dow Jones.
US PCE data and other macrodata
Dow Jones Index is also expected to react on Friday, when the personal consumption expenditures (PCE) report will be released. PCE, or personal consumption expenditure (PCE), is an important data on inflation that examines the changes in urban and rural prices.
The economists are expecting the data to reveal that headline PCE has risen from 2,1% in April, to 2,2% in May. The core PCE should move up from 2.5% – 2.6%.
Federal Reserve officials are often influenced by these numbers. The Federal Reserve would be justified in being cautious about interest rates if there were signs that inflation increased in May. The Federal Reserve left interest rates at the same level in its last rate announcement. It also hinted it would only make two reductions this year.
Other macro-data that could impact Dow Jones include the US GDP for the first quarter, the initial claims of unemployment, the consumer confidence and the PMI flash data.
The ICD published the article Top Dow Jones Index catalysts this week.
