7 Nov

Dow Jones Jumps on Tariffs: Investors Eye 30,000

WRITTEN BY Rabindra Samanta

On Wednesday, the Dow Jones Industrial Average Index closed at 27,492.56. On the same day, the index made an intraday high of 27,526.05—its second-highest level. However, in the pre-market hours, the Dow Jones Industrial Average Index futures have risen by more than 100 points. The news about tariff cancelations helped the Dow Jones gain more.

Dow Jones Jumps on Tariffs: Investors Eye 30,000

Dow Jones’ tariff-related move

According to China’s Ministry of Commerce spokesperson, China and the US agreed to remove a portion of the current tariffs. Based on a CNBC report today, the Chinese official said that both sides will eliminate the imposed tariff by the same magnitude gradually for the trade agreement. 

In June 2018, the trade war intensified. The US and China both imposed tariffs on each other. In August, both sides escalated the trade war. The trade war increased uncertainty in the global trade policy. The escalation dragged the Dow Jones in August.

Stocks to watch

In today’s trade, Apple (AAPL) could add more wealth to its stockholders. On a year-to-date basis, Apple’s stock prices have outperformed the Dow Jones by 45.2 percentage points as of Wednesday. Moreover, stocks like Alibaba (BABA) might extend this month’s gains. So far, Alibaba’s stock prices have risen 4.2% this month. Talks of a possible delisting due to the US-China trade war impacted the stock.

Dow Jones at 30,000?

On Wednesday, the Dow Jones was around 2,500 points below the 30,000 level. Another 10% rise from the current level would help the Dow Jones easily beat the 30,000 level. With a complete trade resolution on the horizon, the equity index might rise more. However, the USMCA (United States–Mexico–Canada Agreement) bill could be the next catalyst for any sharp upside in the equity market.

However, the USMCA bill is still pending in the US Senate. The Trump administration faces challenges to move the bill through the House of Representatives. Democrats have a majority in the House. Steve Moore, one of President Trump’s former advisers during the presidential election campaign, accused House Speaker Nancy Pelosi of delaying the USMCA bill, according to a report from Fox Business News on Wednesday.

Experts’ views

In the next 50 years, legendary investor Ron Baron sees the Dow Jones at 650,000. Investors’ money could multiply by around 24x from the current levels. To learn more, read Ron Baron Sees the Dow at 650,000 in the Next 50 Years. Also, famous hedge fund manager Leon Cooperman thinks that there’s room for more upside in the equity market. However, Morgan Stanley warned about a lower return in the stock market for the next decade.

Asian markets

In today’s trade, the Shanghai Composite Index managed to close in the positive territory. Meanwhile, India’s Nifty 50 closed at a new record level. Japan’s Nikkei is also in a similar uptrend. Bullishness in the Asian markets could help the Dow Jones make a new all-time high in today’s trade.

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