Stock Indices: Dow Jones rises a second straight day on dovish Fed, Apple weighs

On Wednesday Dow Jones Industrial Average traded within the range of 17,920.74-18,083.73. The benchmark closed at 18,041.55, edging up 0.28% (51.23 points) on a daily basis. It has been the 37th gain in the past 61 trading days and also a second consecutive one. The daily high has been the highest level since April 21st, when a high of 18,107.29 was registered. The blue-chip gauge has risen 2.02% so far in April, following two consecutive months of gains.

Yesterday US equities erased earlier losses, a result of a disappointing earnings report by Apple, as the FOMC Policy Statement appeared as rather dovish. The Federal Open Market Committee left the target range for the federal funds rate intact between 0.25% and 0.50%, as largely expected, citing improvement in US labor market, but also a certain slowdown in economic activity. According to extracts from the FOMC Policy Statement, released on April 27th: “Growth in household spending has moderated, although households’ real income has risen at a solid rate and consumer sentiment remains high. Since the beginning of the year, the housing sector has improved further but business fixed investment and net exports have been soft.”

“Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of declines in energy and import prices dissipate and the labor market strengthens further.”

“The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”

Among the companies included in the benchmark, 8 registered a decline and 22 recorded gains on Wednesday. The shares of Apple Inc (AAPL) recorded the worst performance within the Dow on April 27th, going down 6.26% to close at $97.82. It has been the 12th drop in the past 23 trading days, a fifth consecutive one and also the sharpest one since January 27th, when the stock went down 6.57%. April 27th low of $95.74 has been the lowest level since February 25th, when a low of $95.25 was registered. Apple stock has lost 10.25% of its value so far during the current month, following a 12.72% surge in March. It became clear that Apples iPhone sales came well below market consensus as global demand for smartphones seemed to have weakened. The tech giants Q1 revenue was reported to have shrunk to $50.56 billion from $75.87 billion in the final quarter of 2015. The median forecast by experts pointed to a lesser decrease in revenue, to $52.05 billion.

UnitedHealth Group Incorporated (UNH) was the second worst performer within the DJIA on April 27th, falling 1.07% to close at $132.80 per share. It has been the 10th drop in the past 23 trading days and also the steepest one since April 5th, when the stock went down 1.89%. April 27th low of $131.90 has been the lowest price level since April 20th, when a low of $130.90 was registered. UnitedHealth shares have risen 3.03% so far in April, following two consecutive months of advance.

At the same time, the shares of Boeing Company (BA) recorded the most notable daily increase within the DJIA on April 27th, going up 2.88%, to close at $137.08, while marking their 14th gain in the past 23 trading days, a second consecutive one and also the sharpest one since February 17th, when the stock rose 3.32%. April 27th high of $137.88 has been the highest price level since January 6th, when a high of $139.35 was registered. Boeing has added 7.99% to its market value so far during the current month, following a 7.41% advance in March. The aircraft manufacturer reported its Q1 earnings per share rose to $1.74 from $1.60 in the final quarter of 2015, but fell short of market consensus, pointing to an increase to $2.13. Boeings Q1 revenue was reported at $22.63 billion, outstripping the median forecast by analysts, but down from $23.57 billion in Q4 2015.

Verizon Communications Inc (VZ) was the second best performer within the Dow on Wednesday, rising 2.48%, to close at $51.69. It has been the 11th gain in the past 23 trading days and also the steepest one since January 26th, when the stock went up 2.59%. April 27th high of $51.81 has been the highest level since April 20th, when a high of $52.22 a share was registered. The stock has lost 4.42% of its market value so far in April, following four consecutive months of gains.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the Thursday pivot levels for DJIA are presented as follows:

R1 – 18,058.00
R2 – 18,072.94
R3 (range resistance) – 18,087.88
R4 (range breakout) – 18,132.70

S1 – 18,028.12
S2 – 18,013.18
S3 (range support) – 17,998.24
S4 (range breakout) – 17,953.42

By using the traditional method of calculation, the weekly pivot levels for DJIA are presented as follows:

Central Pivot Point – 18,006.53
R1 – 18,164.85
R2 – 18,325.94
R3 – 18,484.26

S1 – 17,845.44
S2 – 17,687.12
S3 – 17,526.03