With Second Quarter Earnings season underway, we are expecting the Dow Jones to be impacted by both positive and negative earnings results. Having hit a 118 year high at the 17,000 level many wonder whether the strength of the Dow will continue. Representing some of the major blue chip stocks such as Exxon Mobil and Coca Cola, the index is heavily impacted by consumer spending behavior which has been more positive of late.
Investors Notes:
- The Dow Jones experiences annual seasonality in July, posting an average of 1.1% of gains over the past 20 years.
- Manufacturing and Industrial production has been expanding at an impressive pace since the recession which is translating to second quarter increases in both home and auto sales.
- We are expecting acceleration of the labour market to continue, with the best 5 months of job growth since 2007, which should translate to consumer spending and hence, increased profit margins.
- If we look at the technical perspective, price action remains above long-term moving averages, indicating the upward trend in the index is set to continue.
- Banc De Binary analysts predict that the Dow Jones Industrial Average will continue its growth into 2014 and beyond, indicating a potential long-term CALL in DOW index.