Dow Jones futures edge lower as US midterm election approaches

US index futures edge lower as higher energy prices and political risks surrounding the US midterm elections weigh on sentiment.
Pre-market losses in Apple and Palantir contrast with robust revenue across the wider corporate technology sector.
Upcoming results from major companies, including AMD, Pfizer, and Shopify, take centre stage for traders.

Dow Jones futures face selling pressure during Tuesday's European trading hours, slipping 0.5% to around 51,880. A 0.15% decline leaves S&P 500 futures near 7,560, while Nasdaq 100 futures hold broadly unchanged at around 28,140.

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

Caution ahead of the US midterm elections weighed on US stock futures. High energy prices associated with the ongoing conflicts with Iran have increased political pressure on US President Donald Trump and the Republican Party.

Slower sales growth and fourth-quarter revenue guidance below expectations sent Apple shares down nearly 3% in pre-market trading. Despite Q3 earnings exceeding forecasts, Palantir shares also lost almost 3%. Anthropic, by contrast, announced that quarterly revenue had risen twelvefold and set out plans to invest more than $895 billion over the coming years.

Monday's regular trading session saw the Dow Jones advance 0.41%, whereas the S&P 500 and Nasdaq Composite declined 0.51% and 1.07%, respectively, as semiconductor stocks suffered deepening losses. Tuesday's major earnings announcements are now in focus, with AMD, SMCI, Pfizer, Shopify, and Booking Holdings among the companies due to report.

Could a blue sweep pressure Tech and long-end Treasuries? Societe Generale weighs in

The political environment could continue to weigh on key market segments, according to economists at Societe Generale. They note that their US team “believes a blue sweep is likely and such an outcome may not be particularly conducive to a rebound in Tech stocks and would potentially set up another round of flattening in the long end of the Treasury curve.”

Dow Jones: Common Questions

How is the Dow Jones constructed?

Among the world's oldest stock market indices, the Dow Jones Industrial Average comprises the 30 most actively traded US stocks. Weightings are based on share prices, not market capitalisation. To calculate the index, the prices of its constituent shares are added together and divided by a factor that currently stands at 0.152. Charles Dow, who also established the Wall Street Journal, created the index. Its coverage has subsequently drawn criticism for being insufficiently representative: it follows just 30 conglomerates, in contrast to broader benchmarks such as the S&P 500.

What drives movements in the Dow Jones Industrial Average?

The Dow Jones Industrial Average (DJIA) responds to several influences, foremost among them the combined performance of its constituent companies, as shown in their quarterly earnings reports. Economic data from the US and the rest of the world also shapes the index through its effect on investor sentiment. Interest rates determined by the Federal Reserve (Fed) are another influence, since they affect borrowing costs for the many companies that depend heavily on credit. Inflation, alongside other indicators that shape Fed decisions, can therefore be an important driver.

How does Dow Theory identify market trends?

Developed by Charles Dow, Dow Theory offers a framework for identifying the stock market's primary trend. It requires comparing the direction of the Dow Jones Industrial Average (DJIA) with that of the Dow Jones Transportation Average (DJTA), and following a trend only when both move in the same direction. Trading volume provides confirmation, while analysis of peaks and troughs also forms part of the approach. The theory describes three phases in a trend: accumulation, when smart money begins buying or selling; public participation, when the broader public joins the move; and distribution, when smart money withdraws.

Which instruments offer exposure to the DJIA?

Investors and traders can access the DJIA through several instruments. ETFs offer a way to trade it as one security without purchasing shares in each of the 30 constituent companies; the SPDR Dow Jones Industrial Average ETF (DIA) is a prominent example. Futures contracts allow speculation on the index's future value. Options, meanwhile, grant the right, without imposing an obligation, to buy or sell the index at a price agreed in advance for a future date. By buying a share in a mutual fund's diversified portfolio of DJIA stocks, investors can also gain exposure to the index as a whole.