Anthropic's filing boosts tech while Dow Jones Industrial Average trails

52,400 remains out of reach as DJIA surrenders about two-thirds of its early advance.
About 105 points from Goldman Sachs account for most of the price-weighted index's advance.
Wednesday brings the Fed decision, followed by results from Microsoft and Alphabet.

About seven of every ten points gained by the Dow Jones Industrial Average on Monday came from Goldman Sachs (GS). By the tenth five-minute bar, the index had reached nearly 52,600. It then surrendered about two-thirds of its advance at the session low near 52,250, before closing below 52,400.

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At about $890, Goldman is the Dow's highest-priced constituent. The index's share-price weighting meant its 2% advance contributed about 105 points. Together, UnitedHealth (UNH) and Merck (MRK) subtracted about 70 points. Those losses left the Dow trailing the S&P 500, which gives technology shares a greater weighting.

Up to $120.5 billion will go towards computing based on Nvidia chips, according to Anthropic's Nasdaq listing filing. Nvidia (NVDA) contributed about 30 points. The filing also pledges up to $114.5 billion to Google through 2033. Alphabet (GOOGL) declined about 1%, subtracting about 20 points from the Dow.

Key events ahead

At 18:00 GMT on Wednesday, the Federal Open Market Committee (FOMC) is scheduled to announce its decision. Futures imply about a 10% probability of an increase from 3.75%-4.00%. Fed Chair Warsh will hold his press conference at 18:30 GMT. Thursday's releases at 12:30 GMT include the September Personal Consumption Expenditures Price Index (PCE) and third-quarter Gross Domestic Product (GDP). Both are relevant to a potential December rate increase.

Tuesday's pre-market results come from Boeing (BA), Coca-Cola (KO) and Sherwin-Williams (SHW), with Visa (V) reporting after the close. Following Wednesday's Fed decision, Microsoft (MSFT) and Alphabet release their earnings. Thursday brings results from Merck and Caterpillar (CAT), whose share price of about $690 makes it the Dow's second most expensive constituent. Chevron (CVX) reports on Friday.

Dow technical outlook

About a quarter of the Dow's advance between the 1 October low near 50,500 and the 22 October high near 52,900 has been erased. The index nevertheless remains above its 50-day Exponential Moving Average (EMA), near 52,100. Roughly 4% higher lies the 5 August peak, just below 54,750. Since Thursday, daily momentum has eased from overbought levels.

5-minute Dow Jones chart

Dow Jones: key questions

The Dow Jones explained

Comprising 30 of the most actively traded US stocks, the Dow Jones Industrial Average is among the world's oldest stock market indices. Share prices, rather than market capitalisation, determine its weighting. To calculate the index, the prices of its constituents are added together and divided by a factor, currently 0.152. Its creator, Charles Dow, also founded the Wall Street Journal. More recently, critics have questioned how broadly it represents the market: it follows only 30 conglomerates, in contrast to wider indices such as the S&P 500.

Key drivers of the Dow Jones Industrial Average

Quarterly earnings reports reveal the combined performance of the constituent companies, the principal driver of the Dow Jones Industrial Average (DJIA). Other influences include US and global macroeconomic releases, which shape investor sentiment. Interest rates set by the Federal Reserve (Fed) matter too: they determine borrowing costs for the many companies that depend heavily on credit. Inflation, alongside other indicators informing Fed decisions, can therefore have a substantial impact on the index.

Dow Theory explained

Developed by Charles Dow, Dow Theory seeks to identify the stock market's primary trend. It calls for comparing the direction of the Dow Jones Industrial Average (DJIA) with that of the Dow Jones Transportation Average (DJTA), following a trend only when both move the same way. Trading volume provides confirmation, while peak-and-trough analysis is also part of the method. Dow's framework identifies three phases: accumulation, as smart money begins buying or selling; public participation, as the wider public enters; and distribution, as smart money withdraws.

Ways to trade the DJIA

Investors can access the DJIA through several instruments. ETFs offer a way to trade the index as one security without buying shares in each of its 30 constituent companies. The SPDR Dow Jones Industrial Average ETF (DIA) is a prominent example. Traders can also use DJIA futures contracts to speculate on the index's future value. Options confer the right, without an obligation, to buy or sell the index at an agreed price on a future date. Another route is through mutual funds: purchasing a share in a diversified portfolio of DJIA stocks gives investors exposure to the index as a whole.

Anthropic's filing boosts tech while Dow Jones Industrial Average trails

Key events ahead

Dow technical outlook

5-minute Dow Jones chart