Donald Trump, Trump, Dow, Dow Jones, Dow Futures
The Dow is within touching distance of 27,000 again. | Source: Lev radin via

Based on pre-market trading, the Dow Jones has surpassed 27,000 points with an implied opening gain of 125 points as markets shrug off impeachment talks.

Within a month, the Dow Jones has surged from 26,118 points to over 27,000 points, demonstrating a noticeable increase in the confidence of investors towards the short to medium term performance of U.S. stocks.

Dow futures indicate an opening for the Dow Jones at over 27,000 points
Dow futures indicate an opening for the Dow Jones at over 27,000 points | Source: Yahoo Finance

The recovery of the Dow Jones at this juncture could be proven to be crucial considering the anticipated release of earnings reports by major conglomerates in October that is set to coincide with possible interest rate cut discussions by the Federal Reserve.

Despite the move of the Democratic Party to pursue the impeachment inquiry and the plan of Republican Senate majority leader Mitch McConnell to hold a Senate trial if the house decides to impeach President Trump, the Dow Jones and the rest of the U.S. equities market are showing resilience.

Dow Jones makes its way towards its record high: key catalysts to sustain momentum

In the short term, at least until the year’s end, the Dow Jones would need to see significant progress in the U.S.-China trade discussions in October, strong earnings from top sectors in October, and the willingness of the Federal Reserve to maintain the interest rate low heading into 2020.

According to White House trade advisor Peter Navarro, the U.S. will not restrict Chinese companies and that reports surrounding any developments regarding it are false.

Navarro told CNBC:

“It was really irresponsible journalism and the problem we have here … these bad stories push out the good. And what happens is, as soon as Bloomberg puts it out there, there’s pressure from others to put it out there. This story was just so full of inaccuracies. And in terms of the truth of the matter, what the Treasury said, I think, was accurate.”

With the White House emphasizing that the U.S. does not intend to impose restrictions on Chinese companies and Chinese President Xi Jinping stating that the government will look to pursue peaceful development at the 70th anniversary of the Chinese Communist Party’s rule celebration, strategists anticipate a trade deal to materialize in the upcoming months.

Due to the rising optimism towards the Dow Jones, safe-haven assets in the likes of gold and silver have declined in value throughout the past several weeks.

Technical analysts have said that gold is likely to see a further sell-off based on technical indicators, indicating that investors have become more confident towards the short term trend of the Dow Jones and the U.S. equities market in general.

Not all are convinced stocks are heading upwards

Richard D. Wolff, an economics professor at UMass Amherst, suggested that the U.S. economy has been bloated with empty promises, which could lead the Dow Jones rally to be short-lived.

Wolff, citing JP Morgan, said:

“No way fooled by empty Trump boasts about US economy. JP Morgan bank downgrades US stocks and upgrades European stocks.”

Some analysts also believe that the potential effect of a trade deal between the U.S. and China on the Dow and U.S. stocks has been overstated, with Stephen Roach of Yale University stating that a grand deal is highly unlikely to happen anytime soon.

He stated:

“The best that we can hope for is that China does agree to a buying program; soybeans, airplanes, and the usual menu of goods. But the structural issues, which are the defining issues of this conflict–intellectual property rights, forced technology transfer–I don’t think we will be making progress on those before the election.”

This article was edited by Samburaj Das.

You May Also Like

Deutsche Bank Reveals the Real Reason Stock Market Is at All-Time Highs (& Why It Can’t Continue)

The US stock market is at all-time highs, but what’s driving this ten-year bull market? It’s stock buybacks, according to Deutsche Bank.

Dow Futures Rocket but Warren Buffett’s $128 Billion Skips Overpriced Market

Dow Jones Industrial Average (DJIA) futures point to new stock market highs, so why is Warren Buffett reluctant to invest?

US Steel (NYSE:X) Needs More Than Trump Tariffs to End 2019 in the Green

US Steel (NYSE:X) rose swiftly after President Donald Trump announced the reimposition of tariffs on imports from Brazil and Argentina.

Growth Recession Chokes India as GDP Tumbles, and No One Seems to Care

India’s GDP growth fell to a six-year low in Q2, but the country’s government is in denial while the economy reels under a recession.

Dow Pops While Trump Trade War Hits Unsettling Milestone

The Dow kicked off December with a recovery, but stock market bulls must wrestle with an unsettling trade war milestone.

5 Reasons Why the Dow Suffered a 200-Point Nosedive Today

The Dow Jones recoiled on Monday, relinquishing its gains and diving more than 200 points into decline. Here are five reasons why.