The Dow Jones Index has moved sideways in the past few weeks as investors reacted to the ongoing crisis in the Middle East. The blue-chip index, which tracks some of the biggest American companies, ended last week at $42,205, a few points below this month’s high of $43,120. Here are some of the top catalysts for the index this week.
US, Israel, and Iran’s war
The main catalyst for the Dow Jones this week will be the ongoing crisis between Iran, Israel, and the United States. The United States launched a bomb attack against key Iranian nuclear sites on Saturday night.
It attacked sites in Fordow, Natanz, and Esfahan as it sought to destroy Iran’s nuclear program. In a Truth Social post, Trump threatened more actions against Iran if it retaliated against the United States.
It is unclear what happens after this between the three countries. What is clear is that the markets could have some volatility on Monday and that West Texas Intermediate and Brent crude oil prices could surge.
Higher oil prices means that the US inflation will remain at an elevated level in the coming months. Higher inflation levels will make it difficult for the Federal Reserve to cut interest rates as Donald Trump has demanded.
Top corporate earnings
The other major catalyst for the Dow Jones this week will be key earnings from some important companies.
The first major company to watch will be FedEx, one of the top players in the delivery industry. FedEx and other similar firms like UPS are often seen as barometers for the American and global economy because of the volumes of parcels they deliver. FedEx’s earnings will come three days after its founder’s death.
Nike, a major player in the Dow Jones Index will also publish its finances on Thursday. These numbers will provide more color about its business and whether the turnaround efforts are working.
The other top companies that may impact the Dow Jones Index are Carnival, Micron, FactSet, and Paychex.
US PCE and other macro data
The Dow Jones Index will also react to the upcoming personal consumption expenditure (PCE) data on Friday. PCE is an important inflation data that looks at the change in prices of urban and rural areas.
Economists expect the data to show that the headline PCE inflation rose from 2.1% in April to 2.2% in May. Core PCE is expected to move from 2.5% to 2.6%.
These numbers often have an impact on the Federal Reserve. Signs that inflation rose in May would justify the Federal Reserve’s caution on interest rates. In last week’s interest rate decision, the bank left rates unchanged and hinted that it will deliver just two cuts this year.
The other top macro data that may impact the Dow Jones Index are the US first-quarter GDP, initial jobless claims, consumer confidence, and the flash manufacturing and services PMI data.
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