Will Amgen and Caterpillar Earnings Save the DJIA?

The Dow Jones fell 1.39% despite its exposure to defensive stocks. However, during the US trading session, shareholders refrained from further selling as leading economists indicated two large rate cuts by the Fed. Additionally, economists assure investors that the data points to a slowdown rather than a recession. Will the Dow Jones rebound?

A potential upward correction for the stock market depends on three factors. Investors would prefer to see stable economic data, though no major US data is due this week. For the Dow Jones to recover, the upcoming earnings data must exceed expectations to soothe investor nerves.

Amgen and Caterpillar will release their quarterly earnings reports before the US session opens. Amgen is the fifth most influential stock for the Dow Jones, and Caterpillar is the sixth, together comprising 10.80% of the index. Both stocks declined on Monday but have beaten earnings expectations for the past four quarters. If they do so again, along with positive forward guidance, a Dow Jones correction becomes more likely.

In the medium to long term, other risks remain. Monday’s decline was also due to escalating geopolitical tensions in the Middle East. Reports indicate Israel is on high alert, with a potential full-scale war involving Israel, Iran, and Lebanon. Escalating tensions could dampen stock market sentiment and overall market risk appetite.

If earnings from Amgen and Caterpillar are positive and the price breaks above the current breakout level of $39,151.92, a buy signal is possible. Conversely, if the price falls below $38,675, it would signal a bearish trend continuation pattern. Medium-term targets for a bearish trend are $38,410.60 and $38,231 (Fibonacci).

Market Summary

– Investors are buying the dip, but is the collapse truly over? Asian and US indices rebound as the US session opens.
– The Dow Jones rises by 0.40%, but risks persist without positive earnings data.
– Investors are reassured by potential significant interest rate cuts from the Federal Reserve, with JP Morgan and Citigroup predicting two large cuts in 2024.
– US economic data remains weak, but economists suggest a recession is not yet on the horizon.
– Investors are now focusing on earnings reports from Amgen, Caterpillar, and Airbnb.