Stock market today: Why Dow Jones Index futures are falling

The Dow Jones Index futures retreated by over 250 points as investors reflected on major events, including the latest subpoena on the Federal Reserve and the upcoming corporate earnings and consumer inflation numbers. It retreated to $49,258, down from the all-time high of $49,500. 

Dow Jones Index futures slip as concerns on the Federal Reserve’s independence remains

The Dow Jones Index futures retreated as investors remained concerned about the independence of the Federal Reserve. In a statement, Jerome Powell, the Fed chair, said that the bank had received a subpoena from the Justice Department. 

Powell said that he would fight back, noting that the potential lawsuit was because of his reluctance to cut interest rates, as Donald Trump has pushed him to do. He has received support from Senator Thom Tillis, who said that he will not vote to advance any Fed nominee unless the pursuit ended.

On the positive side, the United States, while not perfect, has a rule of law, meaning that the Justice Department will need to justify its actions to the court system. And as we saw in the Lisa Cook case, chances are that the Fed will prevail. 

The new development came two days after the Bureau of Labor Statistics (BLS) published the latest US jobs data. This report showed that the economy added 55k jobs as the unemployment rate retreated to 4.4%.

The bureau will next release the December consumer inflation report. Economists polled by Reuters expect the data to show that the headline Consumer Price Index (CPI) dropped to 2.5% in December. Core inflation, which excludes the volatile food and energy prices, remained unchanged at 2.6%.

These numbers will help the Fed when delivering its interest rate decisions this year. Economists expect the bank will leave interest rates unchanged in this month’s meeting.

Corporate earnings ahead

The other catalyst for the Dow Jones Index this week will be the upcoming corporate earnings from the biggest companies in the United States.

Top banks like Goldman Sachs, Morgan Stanley, JPMorgan, and Wells Fargo will publish their financial results. Other top firms to watch will be popular names like Delta, BlackRock, State Street, and Taiwan Semiconductor, and JB Hunt Transport.

Wall Street analysts believe that American companies will publish strong financial results in this earnings season. The average estimate is that companies in the S&P 500 Index will record an earnings growth of 8.3%, continuing the winning streak that has been going on in the past ten quarters.

Geopolitics factors to impact American stocks 

The Dow Jones Index will also react to the ongoing geopolitical issues, especially the protests in Iran. In a statement, Donald Trump continued to threaten Iran’s leaders of a potential strike in the country as the death toll rise to over 500 people.

The deterioration of the situation in the Middle East will have an impact on American stocks because of the impact of the energy markets. Brent crude oil jumped to $63.45, while the West Texas Intermediate (WTI) jumped to $60.

Dow Jones Futures technical analysis 

The daily timeframe chart shows that the Dow Jones futures retreated from the all-time high of $49,870 to the current $49,483. It has remained above all moving averages.

At the same time, the MACD and the Relative Strength Index (RSI) have continued moving sideways. Therefore, the index will likely be volatile as bulls maintain the momentum. A move above the all-time high of $49,870 will confirm the bullish outlook and point to more gains, potentially to the psychological level at $50,000.

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