Dow Futures Trudge Lower as Trade Deal Skepticism Shadows All-Time Highs

Dow Jones Industrial Average futures are in choppy waters early Tuesday as the stock market is in search of new catalysts.
Posted in: Markets
Published:
December 17, 2019 11:56 AM UTC
  • Dow Jones Industrial Average futures point toward a lower open.
  • Boeing (NYSE: BA) could weigh on the stock market today as trade deal-related enthusiasm fades.
  • Unfavorable data points could pose more challenges for the market today.

Futures on the Dow Jones Industrial Average (DJIA) are in the red early Tuesday morning as yesterday’s trade deal-related euphoria has died down. The Dow and other stock market indexes recorded impressive gains to begin the week. The Dow swung to record highs as the optimism surround the U.S.-China trade deal was enough to offset the headwinds posed by the decline in Boeing (NYSE: BA) stock.

But Dow’s early morning action on Tuesday indicates that the stock market is now looking for a fresh set of catalysts to end the year on a high. The problem is that there are quite a few headwinds that could diffuse the Dow today, and that’s probably why the futures are pointing toward a weak stock market open.

Dow futures swim in the red as there are no fresh catalysts

Dow Jones futures are down 29 points, or 0.10 percent, to 28,225 points at 5.10 am ET. The futures showed promising signs earlier on with a reading of 28,272 points at 2.50 am ET. But the confidence has waned off now and it looks like the stock market might have a bad day today.

Dow Jones Industrial Average futures are in the red this morning. | Source: Yahoo! Finance

Futures on the S&P 500 are almost flat while Nasdaq Composite futures are up slightly this morning.

A host of challenges could knock the wind out of the stock market’s sails

While a U.S.-China trade deal has been a cause for celebration in the stock market, the details are capable of unsettling the Dow today. The biggest cause for concern is the timeline. President Trump believes that the deal will be completed in the next two weeks, but there is no official word from Beijing.

Considering that there are aspects of the deal that have not been made public yet, it can be assumed that Washington and Beijing are still working on some details. Any disagreement between the two sides could throw the deal into disarray, posing a challenge to the Dow and the stock market.

Meanwhile, it is likely that Boeing stock will continue to head lower today after yesterday’s steep decline, as it is already in the red during pre-market trading. The Dow’s biggest component was down more than 4 percent Monday. The aircraft major is all set to halt the production of the 737 Max temporarily from January.

Further losses in Boeing stock will definitely have a negative effect on the Dow considering the influence the aircraft company commands over the index.

Finally, the stock market will keep an eye for a slew of economic data today. U.S. housing starts for the month of November are expected at 8.30 am ET, along with building permits data. A strong reading on this front should be a tailwind for the Dow as housing starts numbers have been patchy in recent months, causing trouble for the U.S. housing market in the form of weak supply.

Industrial production numbers will also be released today. U.S. industrial production had shrunk 1.1 percent in October following a slight drop in September. The readings have been continuously declining over the past few months.

Industrial production in the U.S. has been dwindling in recent months. | Source: TradingEconomics/Federal Reserve

So, another round of negative data could knock the wind out of the Dow’s rally and send the stock market lower today.

Samburaj Das edited this article for CCN.com. If you see a breach of our Code of Ethics or Rights and Duties of the Editor or find a factual, spelling, or grammar error, please contact us.

Last modified: January 22, 2020 11:40 PM UTC

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Harsh Chauhan @techjunk13

Harsh has been covering financial markets on CCN since 2019. He has also written for other reputed publications such as The Motley Fool, TheStreet, and Seeking Alpha, and gets regularly featured on Yahoo! Finance. Harsh is based out of Indore, India. You can follow him on Twitter @techjunk13 or email him at harsh.chauhan(at)outlook.com.

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