- 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.
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.
Although President Trump declared “a very large Phase One Deal with China,” the White House put few agricultural details in writing over the weekend, saying the agreement calls for “substantial purchases” of farm exports.https://t.co/4JJbEanFKN
— Successful Farming (@SuccessfulFarm) December 16, 2019
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.
After two deadly crashes and nine months since the FAA grounded them, Boeing's pulled the plug on the Boeing 737 MAX https://t.co/Nz11BbkpVU
— Matthew Keys (@MatthewKeysLive) December 16, 2019
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.
So, another round of negative data could knock the wind out of the Dow’s rally and send the stock market lower today.