US PCE data awaited as Dow Jones futures advance

Dow Jones futures advance, while technology weakness weighs on S&P 500 and Nasdaq after Alphabet’s earnings decline.
10% after-hours slide for Alphabet on AI spending worries; Microsoft rises 4% as Azure cloud growth strengthens.
3.75%–4.00%: Fed leaves rates unchanged as inflation stays elevated; two officials dissent.

Dow Jones futures advanced 0.37% to near 52,890. US stock futures were mixed during Thursday’s European session, with S&P 500 futures declining 0.38% to around 7,750 and Nasdaq 100 futures retreating 1.2% to near 29,620. Attention is shifting to the forthcoming US Personal Consumption Expenditures (PCE) price index. Traders are looking to the Federal Reserve’s preferred inflation gauge for a clearer indication of the monetary policy outlook.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Contrasting earnings reports from major technology companies largely explained the divergence. After weaker-than-expected third-quarter revenue across most of its core businesses, Alphabet slid around 10% in after-hours dealing. The results revived concerns about the high cost of artificial intelligence investments. Microsoft, by contrast, climbed nearly 4% as strong expansion in its Azure cloud infrastructure helped quarterly results exceed expectations.

As widely anticipated, the Federal Reserve left interest rates at 3.75%–4.00%, but provided little guidance on its next policy move. Resilient domestic spending, robust capital investment and strong productivity growth continue to support economic expansion, according to the central bank’s official statement. The Fed also reported that employment gains have kept pace with workforce growth, leaving the unemployment rate relatively stable.

Although inflationary pressures remain elevated, the Fed paused further rate increases to collect more data before determining its next policy stance. Two officials opposed the decision: Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack favoured an immediate rate rise.

At the post-meeting briefing, Fed Chair Kevin Warsh stressed the economy’s underlying strength and reiterated the committee’s commitment to bringing inflation back to its 2% target. Warsh said the Fed plans eight meetings next year, one of which will not include a formal vote. He also expects six policy-setting meetings in 2028.

Dow Jones: Key Questions

30 Stocks: What Does the Dow Jones Track?

Comprising the 30 most traded US stocks, the Dow Jones Industrial Average ranks among the world’s oldest stock market indices. Its weighting is based on share prices, not market capitalisation. To calculate the index, the constituent share prices are added together and divided by a factor, currently 0.152. Charles Dow, who also established the Wall Street Journal, founded the index. In subsequent years, critics have questioned its breadth: tracking only 30 conglomerates makes it less representative than broader benchmarks such as the S&P 500.

Dow Jones Industrial Average: Main Market Drivers

Quarterly earnings reports provide the main driver of the Dow Jones Industrial Average (DJIA), revealing the combined performance of its constituent companies. Other influences include US and global macroeconomic figures, which shape investor sentiment. Interest rates set by the Federal Reserve (Fed) also matter because they determine borrowing costs, and many corporations depend heavily on credit. Inflation can therefore be a significant influence, alongside other indicators that inform Fed decisions.

Three Trend Phases: How Dow Theory Works

Developed by Charles Dow to identify the stock market’s primary trend, Dow Theory compares the direction of the Dow Jones Industrial Average (DJIA) with that of the Dow Jones Transportation Average (DJTA). A trend is followed only when both indices move in the same direction, with trading volume used for confirmation. Peak-and-trough analysis also forms part of the approach. Dow’s framework sets out three phases: accumulation, as smart money begins buying or selling; public participation, as the wider public enters; and distribution, as smart money withdraws.

DJIA Trading: Available Instruments

Investors can gain exposure to the DJIA through several instruments. ETFs package the index into a single security, removing the need to purchase shares in each of its 30 constituent companies. The SPDR Dow Jones Industrial Average ETF (DIA) is a leading example. Futures contracts allow traders to speculate on the index’s future value. Options, meanwhile, confer the right, without any obligation, to buy or sell the index at a price agreed in advance for a future date. Through mutual funds, investors can purchase a share of a diversified portfolio of DJIA stocks and thereby gain exposure to the overall index.