Dow Jones Falls 4.2%, Interest Rates May Rise – 01 March 2023
01 Mar 2023
Dow futures rise 60 pts; ISM manufacturing PMI, the retail sector in focus.
U.S. stocks are seen opening higher Wednesday, rebounding after a losing month ahead of the release of manufacturing activity data as well as more earnings from the retail sector.
At 07:00 ET (12:00 GMT), the Dow futures contract was up 60 points, or 0.2%.
February was a difficult month for stocks, with strong economic data prompting concerns that the Federal Reserve will raise borrowing costs to a higher level than previously expected.
The Dow Jones Industrial Average fell 4.2% last month, dragging the blue-chip index into negative territory for the year.
The Fed may hike interest rates to nearly 6%, Bank of America said Tuesday, in a note, as strong U.S. consumer demand and a tight labor market would force the central bank to battle inflation for longer.
The market is currently pricing in a peak of 5.4% by September, above the current 4.75% level.
There was some good news from Asia overnight, as China’s manufacturing activity expanded at the fastest pace in more than a decade in February, pointing to a likely rapid recovery from the second-largest economy in the world.
The equivalent data is due in the U.S. later in the session, with the ISM manufacturing PMI expected to have improved in February to 48.0, from 47.4 the prior month, still in contraction territory.
In corporate news, the retail sector will remain in the spotlight, with home improvement giant Lowe’s (NYSE: LOW) reporting fourth-quarter earnings ahead of expectations, but revenue disappointed and it also issued a very conservative outlook.
Results from department store chain Kohl’s (NYSE: KSS) are also due before the bell.
Additionally, Rivian (NASDAQ: RIVN) stock traded sharply lower premarket after the electric vehicle manufacturer disappointed with its fourth-quarter revenue release after the close Tuesday, citing continuing supply chain issues.
Sticking with EVs, Tesla (NASDAQ: TSLA) is set to confirm later Wednesday that it will build an assembly plant in Mexico after President Andrés Manuel López Obrador appeared to drop some of his objections to the company’s plans.
Oil prices fell Wednesday, giving up early gains, as traders focused on rising U.S. crude inventories as evidence of ample supply in the largest energy consumer in the world.
Data from the American Petroleum Institute, released on Tuesday, showed stocks rose by 6.2 million barrels last week. If confirmed by the official U.S. government data later in the session, this would mean that U.S. stocks have risen by nearly 59 million barrels so far this year.
DOW JONES TECHNICAL ANALYSIS DAILY CHART:
Dow Jones is currently trading in the down channel.
Dow Jones is currently trading below all SMA.
RSI is in the selling zone which suggests bearishness and Stochastic is suggesting a downtrend.
Dow Jones’s immediate resistance is at 32774.70 & its immediate support level is 32564.61
HOW TO TRADE DOW JONES IN THIS WEEK
Dow Jones is trading in a down Channel; now it is at the support zone, if the support zone is broken, we can see a downside. If it holds above the support level, we can see the upside.