News & Analysis

It's all go for US indices as Dow Jones heads for the top and S&P sees all-time high

Andrew Saks, Wednesday, 4 August 2021

It's an interesting time for those watching the Dow Jones index, as sensationalist news reports across North America have been holding it up as a champion among indices this week, with claims that it is just 28 points below a 3 year high.

Given that the Dow Jones Industrial Average index has risen 278.2 points in the past 24 hours, that is quite a remarkable observation.

When looked at on a more modular basis, however, things appear somewhat different, as yesterday it became clear that the Dow Jones Industrial Average struggled to hold a 0.1% gain during the majority of the US trading session, and large multinationals such as American Express dragged at the bottom of the Dow Jones.

By contrast, the S&P 500 gained 0.8% which is being mooted as a new all-time closing high of 4,423.15, when in reality the actual all-time high was on July 29 when the S&P 500 closed at 4,429.23.

The welcome sign of volatility across the US stock markets is very much a factor that is keeping the news reporters on their toes, and let's not overlook the important metric that shows that the Dow Jones is within 0.5% of a record.

Tuesday’s move for stocks served as something of a mirror image to Monday’s market action, which saw a late-day slump drag the Dow and S&P 500 into the red while the tech-heavy Nasdaq held on to a meagre gain.

According to many analysts in North America, the Dow Jones' impressive performance has been assisted by stocks which have benefited directly from the economic recovery, including banks and industrial companies like Caterpillar and 3M. Healthcare stocks such as Amgen and Johnson & Johnson also exceeded expectations as this week began, and in the technology sector, Apple and IBM rose nearly 1.3% and 1.9%, respectively.

With regard to futures, Dow Jones futures fell 0.1% vs. fair value by the time the US session closed yesterday, and S&P 500 futures dipped 0.1% whereas Nasdaq 100 futures rose about 0.1%. This is hardly volatility, but overall, confidence in US stocks appears high.

One of the stars of yesterday's trading session was online payroll and human resource technology provider Paycom, based in Oklahoma City.

The company reported that its earnings jumped 56% as revenue rose 33%, both the best gains for many years as a return to good levels of employment across the United States has fueled a demand for the services provided by the human resources software company.

Paycom also raised guidance and the firm's stock rose 6% overnight. That represents a gap above 404.87, which could serve as either an early entry or a double-bottom base buy point. Completing the day, the company's stock closed up 5 cents at $399.99 per share.

This is a mixed bag in some respects, but it is ultimately encouraging to see the US markets back to more than a degree of activity.

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