- The Dow Jones tested fresh lows on Tuesday but remained stuck near 43,500.
- Investor confidence was dealt a blow after consumer confidence slipped further.
- Signs of a widespread economic slowdown are growing, inflation figures still loom ahead.
The Dow Jones Industrial Average (DJIA) knocked slightly lower on Tuesday, dipping to a fresh multi-week low of 43,285. Investor sentiment recovered enough to push the Dow Jones back above the day’s opening bids near 43,600. Still, confidence remains shaky as signs of a deeper-than-expected economic slowdown encroach around the edges of the data.
US Conference Board consumer confidence survey results came in well below expectations on Tuesday, falling for a third straight month. The CB consumer sentiment index fell to 98.3 in February, far below the median forecast of 102.3, and is the largest single-month decline since Q3 2021. Consumers saw an overall improvement in current business conditions, but consumer expectations for future business conditions, income potential, and employment prospects declined.
Trade policy constraints remain a key concern for markets after US President Donald Trump reiterated his insistence that stiff tariff packages on goods imported from Mexico and Canada will be proceeding next week, as well as a wide swath of reciprocal tariffs on other US trading partners that include additional tariffs to offset other countries’ VAT and digital services taxes on their consumers. Investors still believe President Trump will continue to kick the can down the road and find excuses to pivot away from his tariffs in the eleventh hour. Still, the overarching threat of imposing steep importation taxes on US consumers already grappling with unsteady inflation factors bodes poorly for overall investor confidence.
Dow Jones news
Despite some shaky investor sentiment on Tuesday, the Dow Jones was tilted into the bullish side overall on the day. More of the index’s listed securities were in the green than not, and the worst-performing stock was Goldman Sachs (GS), which declined around 2% and fell to $613 per share. The Dow Jones’ weighting average means every dollar shed from a security’s headline price contributes to a 6.15-point decline.
On the high side, The Home Depot (HD) gained ground on Tuesday, rising around 4% and climbing to about $398 per share despite a gloomy homebuilding outlook.
Dow Jones price forecast
The Dow Jones is at risk of getting caught in another congestion pattern. The major equity index has been stuck below the 50-day Exponential Moving Average (EMA) at 43,908 for three trading sessions in a row, and bidders are running out of time to stage a fresh recovery to record highs above 45,000. As technical pressure gathers on the Dow Jones chart, a fresh backslide to the 200-day EMA rising into the 42,000 handle is looking more likely.
Dow Jones daily chart
AI stocks FAQs
First and foremost, artificial intelligence is an academic discipline that seeks to recreate the cognitive functions, logical understanding, perceptions and pattern recognition of humans in machines. Often abbreviated as AI, artificial intelligence has a number of sub-fields including artificial neural networks, machine learning or predictive analytics, symbolic reasoning, deep learning, natural language processing, speech recognition, image recognition and expert systems. The end goal of the entire field is the creation of artificial general intelligence or AGI. This means producing a machine that can solve arbitrary problems that it has not been trained to solve.
There are a number of different use cases for artificial intelligence. The most well-known of them are generative AI platforms that use training on large language models (LLMs) to answer text-based queries. These include ChatGPT and Google’s Bard platform. Midjourney is a program that generates original images based on user-created text. Other forms of AI utilize probabilistic techniques to determine a quality or perception of an entity, like Upstart’s lending platform, which uses an AI-enhanced credit rating system to determine credit worthiness of applicants by scouring the internet for data related to their career, wealth profile and relationships. Other types of AI use large databases from scientific studies to generate new ideas for possible pharmaceuticals to be tested in laboratories. YouTube, Spotify, Facebook and other content aggregators use AI applications to suggest personalized content to users by collecting and organizing data on their viewing habits.
Nvidia (NVDA) is a semiconductor company that builds both the AI-focused computer chips and some of the platforms that AI engineers use to build their applications. Many proponents view Nvidia as the pick-and-shovel play for the AI revolution since it builds the tools needed to carry out further applications of artificial intelligence. Palantir Technologies (PLTR) is a “big data” analytics company. It has large contracts with the US intelligence community, which uses its Gotham platform to sift through data and determine intelligence leads and inform on pattern recognition. Its Foundry product is used by major corporations to track employee and customer data for use in predictive analytics and discovering anomalies. Microsoft (MSFT) has a large stake in ChatGPT creator OpenAI, the latter of which has not gone public. Microsoft has integrated OpenAI’s technology with its Bing search engine.
Following the introduction of ChatGPT to the general public in late 2022, many stocks associated with AI began to rally. Nvidia for instance advanced well over 200% in the six months following the release. Immediately, pundits on Wall Street began to wonder whether the market was being consumed by another tech bubble. Famous investor Stanley Druckenmiller, who has held major investments in both Palantir and Nvidia, said that bubbles never last just six months. He said that if the excitement over AI did become a bubble, then the extreme valuations would last at least two and a half years or long like the DotCom bubble in the late 1990s. At the midpoint of 2023, the best guess is that the market is not in a bubble, at least for now. Yes, Nvidia traded at 27 times forward sales at that time, but analysts were predicting extremely high revenue growth for years to come. At the height of the DotCom bubble, the NASDAQ 100 traded for 60 times earnings, but in mid-2023 the index traded at 25 times earnings.
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