The Dow Jones’s Reaction To Lower Consumer Demand!

The Dow Jones price quickly collapsed after the US trading session opened and remains low on Thursday. The decline was mainly triggered by the poor performance of Amgen (-5.00%) and Walt Disney (-4.46%), both under pressure from quarterly earnings reports that highlighted some risks. On Wednesday, only 35% of the Dow Jones stocks rose in value, while 65% fell.

Disney’s Earnings Per Share for the latest quarter were significantly higher than expected, up 16%, while revenue met expectations. However, the poor performance of the company’s theme parks dampened sentiment and impacted the overall stock market. Economists attribute the drop in theme park revenue to inflation and lower consumer demand, affecting not just Disney’s stocks but the market as a whole.

In August, poor data can trigger overreactions due to low risk appetite. The next significant quarterly earnings report for the Dow Jones is from Home Depot, due on Tuesday before the market opens.

Adding to market pressure, JP Morgan recently commented that the US economy faces a higher risk of recession in 2024, with a recent selloff wiping out three-quarters of the global carry trade and erasing this year’s gains. Despite this, some observers now believe a national recession is unlikely, even with the cooling of key industries. Experts anticipate a significant adjustment in US Fed monetary policy, which will support GDP growth. JPMorgan Chase & Co. experts predict three reductions in borrowing costs this year: 50 basis points in both September and November, and another 25 basis points in December, though a more cautious approach is also possible.

Technically, the Dow Jones continues to find support at the $38,577.09 level, though it’s testing this level for the fourth time this week. The index is currently trading below the 75-Period EMA, 100-Period SMA, and below the 50.00 level on the RSI. On a positive note, the VIX index and bond yields are trading lower.